Brian Cowen (Laois-Offaly, Fianna Fail)

It is certainly a factor but it may not be the determining one. It should not be ignored, particularly when one considers where some of these firms may go if we do not maintain our competitiveness across all of the criteria they consider. There are countries in other parts of the world which are looking to what we have achieved and which are prepared, if possible, to outdo us in many of these areas. Luckily, however, we have a track record that is keeping pace with developments. We must continually monitor developments in that sector and ensure we have the necessary legislative and regulatory framework in place to enable the continuation of that sort of investment here.

The major growth in our economy in recent years has been accompanied by a rise in corporate profits due to booming export and home markets. This has resulted in a big increase in our corporation tax receipts despite the reduction in the standard rate of corporation tax from 36% when we entered office in 1997 to 12.5% in 2003. The yield from corporation tax in 1997 was €2.16 billion. This increased to approximately €4.8 billion in 2002 and approximately €5.16 billion in 2003. The 2004 budget estimate is for it to increase to approximately €5.35 billion. I have only been Minister for Finance for a short period but I am aware that this is significant revenue, particularly if I want to be able to discuss with other Ministers how to build in sustained social improvements in other areas in which we have social priorities. That revenue is vital and I do not know where we would be without it.

Those who suggest increasing our corporation tax — I note that no one in this House has done so — should think long and hard about what this would do to employment and tax revenue in the economy. The Government is committed to maintaining the 12.5% rate, which has been a successful element in delivering a strong economy that provides jobs here in Ireland where we need them. That is another issue that arises in respect of our commitment to low rates of tax. There is a facile argument that we are looking after the rich. However, all of the progressive changes we have introduced have been geared towards the lower paid.

Another issue that arises is the fact that the corporation tax rate is great in terms of the number of jobs it helps to create. We need to ensure that we continue to create jobs. We sometimes look at this as a monetary issue or consider it a cash cow designed to provide for the provision of services. We have to keep the engine of the economy driving forward if we are to be able to meet the legitimate expectations of many of our people, particularly as they can see that the possibilities which exist are much better than any they could see on the horizon in the past.

I have no difficulty debating tax policy in this House. I am quite open about it. I want to see an informed economic debate take place in this country because there is not sufficient such debate here. There are, however, a great many facile arguments put forward. I want to see a competition of ideas in order that people might discover what are the options. We must devise a model which, on one hand, will maximise job creation and increase the tax take, on the other. I am a pragmatist. I favour low tax rates for a simple reason, namely, they help me to procure more tax revenue in order that I can finance the initiatives I want to take in the social areas. I have seen the damage high taxes did to the social infrastructure in this country and the missed economic opportunities to which they led.

Generations of people were, for too long, obliged to leave the country in order to make a living because of the existence of such high tax rates. We now have a chance to create a virtuous circle rather than a vicious cycle. The alternative being forward to this circle we have created is a return to the vicious cycle. We would be foolish to contemplate such a return. In the meantime, let us engage in a debate about the type of model which will maximise what we want, namely, maintain quality jobs, improve the health and education systems, etc. Let us debate that model but let us not suggest that there is a viable alternative because one does not exist. I accept that the latter is not Senator McDowell's intention. I want such a debate to take place because it would be better for everyone if we engaged in it.

A considerable amount of tax information is provided by me, in response to various parliamentary questions, and by my Department on tax issues. A large number of tax strategy group papers have been published on the web. Detailed tax ready reckoners on tax changes are regularly supplied to Opposition spokespersons and others. Surveys of tax paid by high earners have been published on two occasions. The basis is there for an informed and balanced discussion on tax issues.

A well informed debate would be healthy. Reasoned argument is always welcome and well worked out positions contribute to good policy formation. I would like it if the debate on tax policy could be elevated to that level and not done through the issuing of poorly researched press releases. That would be a benefit to everyone.

The Government's view is that low personal and business taxation have been good for economic growth. They are a key part of part of our overall economic policies, which only last week were endorsed by the IMF. That organisation indicated that the continued impressive performance of Ireland's economy, which is based on sound economic policies, provides useful lessons for other countries.

I hope Senators have found the points I have made useful and I look forward to their contribution to the public debate on these issues.