Dáil debates

Tuesday, 30 May 2017

4:35 pm

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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48. To ask the Minister for Foreign Affairs and Trade if Ireland's status of neutrality or corporate tax rate was discussed at any of the meetings he has attended at EU level to discuss and agree the Brexit negotiation guidelines; and if he will make a statement on the matter. [25701/17]

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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Everyone will agree that Ireland's corporation tax rate and our capacity to determine it are key components of our economic strategy. We must do all we can to protect it. Our corporation tax rate should not and cannot be used as a stick with which to beat us in the negotiations ahead. I ask the Minister whether, as part of the preliminary negotiations or discussions he has had with our European partners, Ireland's neutral status or corporation tax rate was discussed. Did these issues come up at any of the meetings he attended to discuss and agree the Brexit negotiation guidelines?

Photo of Charles FlanaganCharles Flanagan (Laois, Fine Gael)
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Over the course of the past 11 months, since the referendum in the United Kingdom I, with my Government colleagues, I have been involved in an extensive programme of engagements with our EU partners on Brexit. There have been over 400 such engagements with the 27 EU member states and institutions which included, most recently, the visit of the European Union’s chief negotiator, Mr. Michel Barnier, to Ireland. The programme of engagements has been led by the Taoiseach, as well as my colleagues across government, complemented by official level meetings. For my part, I have had nearly 100 engagements with my EU counterparts and the EU institutions. A central goal of the engagement has been to ensure Ireland’s unique circumstances in the context of Brexit are understood by our EU partners and to seek explicit recognition of these issues and priorities in the European Union’s position for the withdrawal negotiations. Throughout my engagement with partners I have emphasised the political imperative of achieving flexible and imaginative solutions in the context of the unique circumstances on the island of Ireland, in particular, with a view to avoiding a hard border. In so doing, I have been equally clear that we will only pursue solutions that are compatible with our aim of protecting the integrity of the Single Market and Ireland’s place in it.

The EU guidelines adopted by the Taoiseach and his counterparts on 29 April fully take account of the Government’s priority of protecting the Good Friday Agreement and the gains of the peace process, including the need for flexible and imaginative solutions to avoid a hard border, as well as recognising bilateral agreements and arrangements between Ireland and the United Kingdom, including the common travel area.

Neither Ireland’s status of neutrality nor our corporation tax rate has been raised in any of my engagements with EU partners, or those of my officials, in the context of the European Union’s negotiation guidelines and directives. These are matters which have no bearing on the forthcoming negotiations between the European Union and the United Kingdom. I have been struck by the very genuine level of engagement and understanding demonstrated by our EU partners of the significant political challenges Brexit poses for Ireland and, in particular, the peace process. Finding solutions will be a challenging exercise, but my engagement with EU partners has left me fully confident that we can count on their support as we seek the right outcome for Ireland at the end of what will be a complex set of negotiations.

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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I thank the Minister for his very clear response. I am sure he will agree that our need to be able to determine our own tax rate is greater than ever, given that we will probably be most affected by Brexit. It will potentially have a disproportionate effect on Ireland in comparison to other EU member states. I tabled my question in the context of remarks made by the new French President, Mr. Emmanuel Macron. I congratulate him on his election, but during the election campaign he singled out Ireland's corporation tax rate and said he believed the gaps in taxation between member states needed to be closed. There have been other similar signals, although perhaps they were only given in the context of an election campaign. Does the Minister agree that our neutrality, our right to set our own rates of corporation or other taxes and the common travel area are red line issues for Ireland in the Brexit negotiations?

Photo of Charles FlanaganCharles Flanagan (Laois, Fine Gael)
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I am satisfied that Ireland's long-standing policy of military neutrality is sufficiently safeguarded by the existing constitutional provisions, such mechanisms as the protocol to the Lisbon Treaty, the various Defence Acts and our long-term policy documents. Tax rates remain within the exclusive competence of member states. All member states are free to set their own corporation tax rate, as they see fit. Ireland's 12.5% corporation tax rate has been a long-standing element of Government policy and remains the centrepiece of our competitive tax offering.

As I have said, the issue of Ireland's corporation tax rate has not been raised with me or any of my officials during our engagements with our EU partners on Brexit. I have to acknowledge that during these engagements, our position has received a very positive reception from our EU colleagues. There has been speculation about the UK's post-Brexit corporation tax plans. It should be noted that the UK's intention to reduce its current 20% corporation tax rate to 17% by 2020 was announced well in advance of the Brexit vote. I do not believe Brexit will have any impact on the UK's ability to set its own corporation tax rates, no more than it will have any impact - adverse or otherwise - on our ability to set our own corporation tax rate.

4:45 pm

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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I am glad, if somewhat surprised, to hear that this issue has not been mentioned. I wonder whether we have made it clear that we do not intend to move on these issues. We are firmly on the EU side of the table in these negotiations. The Minister has rightly mentioned that Britain intends to reduce its corporation tax rate to 17% by 2020. It is not just our corporation tax that makes this country attractive for inward investment. The most important factor is our educated workforce. We have a track record and a reputation as a place where companies can do business and employ people. I ask the Minister to keep it to the forefront of his mind that we cannot be complacent in this regard. We do not know what his new boss will do. I wish him well in that regard. It is very important that Ireland does not take its eye off the ball in case some of our more jealous European partners see this as an opportunity to squeeze what they might see as some concessions from us in areas like neutrality, corporation tax and the common travel area.

Photo of Charles FlanaganCharles Flanagan (Laois, Fine Gael)
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I assure the Deputy and the House that there is no question of any form of complacency on the part of the Government in respect of this issue. We have made a reasonably positive start to these negotiations. Our priorities have been included in the negotiating guidelines and in the commencement position of the British Government, as outlined in its White Paper and in the letters sent to the EU from Prime Minister May. Ireland's long-standing policy of neutrality, which has been pursued by successive Governments, including one supported by Deputy O'Brien, is well known throughout the EU and Europe. I do not believe there is any EU member state that is not fully au faitwith our long-standing policy of military neutrality, which goes hand in hand with our belief that international engagement is critical to enhanced co-operation and reduced conflict throughout the world. I am conscious of both issues raised by Deputy O'Brien. I assure him and the House that we will continue to be mindful of our unique position regarding our rate of corporation tax and our long-standing policy of military neutrality.