Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Deputy for raising this important issue. As the Deputy knows, Hungary is holding up the European ratification of the international agreement on tax at the moment. Their decision to do so has consequences. The United States, for example, has indicated that it will suspend its double taxation agreement with Hungary. One can imagine that if we were to adopt the same approach and if the US were to suspend its tax agreements with Ireland that would not be a position that we would like to be in, given the amount of US investments that we have in Ireland at the moment and have had for decades.

It is relevant to say that our low corporation profit tax rate, which is 12.5%, has been a great success. There are some people who believe that increasing taxes always means higher revenues and that reducing taxes always means lower revenues. That clearly is not always the case. The fact that we have a low corporation profit tax means that we take in more revenue and get in more investments. If you take the amount of corporation profit tax paid in Ireland and divide it by the number of people in the country, we get two- or three-times revenue in than the average EU country. Therefore, low taxes can result in higher revenues. This is a perfect example of where that works.

We have signed up to an international agreement to raise our rate to 15%, but that is only for the very largest companies and there will be some changes as to how the base is calculated. We will probably gain on the 15% but lose a bit on the way the base is calculated. We think it makes sense from an enterprise and economic policy point of view that we should be inside the tent and that we should be part of the agreement. Ireland is not a tax haven. We do not want to be perceived as a tax haven. We think that it makes sense to be inside the agreement. That is one of the reasons why we supported it.

We anticipate that this year we will see record corporation profit tax receipts and that that will continue to rise. The pipeline for FDI is really, really strong. We think that revenues will continue to rise over the next couple of years, but we cannot take that for granted. They will fall at some point. That is why it is important that we use these corporation profit taxes on companies that are coming in in a sensible way. One way we are doing that is by investing a lot into capital, into infrastructure and into things that you only have to build once and therefore maintain after, for example, the metro, the national broadband plan and the housing programme. It makes sense to put these receipts into capital investment, because of the huge deficits that are there in infrastructure, but also to help the economy grow in the future. If we get into a surplus position, and that may well happen, we can put some of it away, either into a rainy-day fund like we did before or perhaps into the Social Insurance Fund to help-----

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