Michael Lowry (Tipperary, Independent) | Oireachtas source

I wish to raise the concern about contingency planning in the event of decreasing levels of foreign direct investment in Ireland as a result of the implementation of the global and European minimum corporation tax rate. Ireland has used our corporation tax rate as a very effective economic development tool, which has successfully resulted in a flood of multinational investment into the country on the back of favourable conditions. However, a decision made in October 2021, that Ireland would accede to a minimum global rate of 15%, which is up from 12.5%, will undoubtedly have ramifications for our future ability to attract investment. The implementation of the OECD agreement will pose major challenges to Ireland given that Department of Finance officials believe there will be a projected loss of income to the Exchequer of at least €2 billion annually.

The summer economic statement, announced last week, cautions of "a clear vulnerability for the public finances" from the "concentration risk" of ten multinational firms now paying half of all corporation tax and €1 in every €8 collected in tax. In response, the Irish Fiscal Advisory Council said these corporation tax receipts "should not be relied on to fund permanent spending increases". That is possibly because of the potential impact on multinational investment confidence in the country.

Given our acute vulnerability, laid bare by many respected commentators, should we explore and review this decision? The decision was made at a time when the global economy was on a more stable footing. Other countries are reviewing their position in the context of global economic factors. Last week, for example, Hungary, which initially supported the minimum rate, has now refused to implement the agreement, with other voices of opposition growing. Indeed, last week the Tánaiste's party colleagues in Fine Gael voted against the motion on a resolution condemning Hungary for taking this action.

Furthermore, the issue was removed from May’s meeting of ECOFIN because agreement was unreachable. We need now more than ever to retain our blue-chip influence. We are entering into a most uncertain period. There is the economic impact of war in Ukraine, we have soaring inflation, a cost-of-living crisis is engulfing Europe and the possibility of a recession is lingering. With the changes in the economic and geopolitical environment in the past nine months, we urgently need to have a defined contingency plan around how we will remain competitive and continue to attract foreign direct investment, FDI, given these proposed global tax changes. It is clear that we now need a comprehensive, whole-of-government approach. The change in our corporation tax rate will seriously impact the Exchequer's buoyancy, something which has allowed us to address issues like the cost-of-living crisis, by using a robust tax take to redistribute to those families who need it at budget time. What plans are in place to address this matter so that as a country we can make decisions that are firmly in our national interest?

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