Seanad debates

Wednesday, 19 January 2011

6:00 pm

Photo of Shane RossShane Ross (Independent)

I am grateful for this opportunity to speak to this motion. I recognise, as should Members on all sides of the House, despite the amendment tabled, that there is great hope in the export figures we received recently. Whether they were delivered by fluke, design or clever Government measures I am not sure, but they have happened and they are certainly a crutch for the Government in its hour of need. It is certainly no coincidence that a motion of this sort is tabled in Government time to grab at a straw which may turn out to be something quite significant.

I do not know, nor does anybody in this House, whether we will be able repay the IMF-EU the amount of money which we have borrowed from them. I do not know whether the growth figures are realistic. There are authorities on both sides, those who say one thing and those who say another, but I know we will be extremely lucky if we achieve that growth. Our dependence on multinationals for our export figures is extremely significant. I congratulate successive Governments for their steadfastness in holding to the decision to encourage multinationals to our shores; it was the great success of what was the economic boom. The construction industry pillar of the boom has collapsed while the multinational pillar was the unsung element. That element continues and we only need to look at the Intel announcement this week to see multinationals still have great confidence in the Irish economy and that is encouraging. There is an apologetic acceptance of that by many of us because we do not like to give the credit for future economic growth to investment from abroad because we like to feel that it is done by ourselves, and indeed some is being done by the food industry.

I ask the Minister of State and his senior Minister to consider one thing: if multinationals are to lead us out of trouble, which undoubtedly they are, could we look again at the 12.5% tax rate? Why do we attract so much employment from US multinationals, in particular, leading to so many spin off benefits to the community, to employees, to housing and to myriad other service industries? The principal hook that attracts them is the tax rate. There are incidentals, such as an educated population, but the main reason is the tax rate. If we are to encourage the export-led, multinational-led recovery, why can we not lower that rate further? Why is the Government so much in a straightjacket that it must stand by the 12.5% rate? It is constantly resisting the pressure from Europe to raise that rate. We had it from Mrs. Merkel yesterday and Sarkozy last week. People are constantly hectoring us that we cannot accept loans from Europe while keeping this tax rate. We are in charge of our own tax rates; as a nation we can do what we like with it. We are not beholden to Europe on that and we should not be subject to pressure on it. I suggest that the Government makes a unilateral decision to reduce corporation tax to less than 10% and stuff Sarkozy, Mrs. Merkel and their cohorts and let us see what will happen. The result will be that the message will go out across Europe and to the United States that Ireland is taking the initiative to improve exports even further. We should indulge in what they refer to so derisively as tax competition; let us do it. What is wrong with tax competition? Europe says it does not want tax competition but we should be tax competitive, we should go in and say we will use this weapon and we do not care too much about the lost revenue because it will be compensated for by increased employment and exports.

I am not anti-European but we must be careful about the balance in our relationships with Europe and America. During the negotiations, it was clear the IMF and the European Union took very different attitudes. It was the Europeans who screwed us, not the IMF; it was the Europeans who came down hard on us, telling us we cannot do this, that and the other. It is perfectly apparent now that the IMF said we could burn the bondholders; it had no fundamental problem with that. It was the Europeans, particularly Trichet and his boys, who said we would get no money if we did that. Why do we have to take that sort of diktat from Europe?

A funny thing happened in the European Parliament today. Joe Higgins and José Manuel Barroso had a set to. I would not normally be sympathetic with Joe Higgins but he said we should not be dictated to by European bankers, and that is what has happened; the bailout result pleased European bankers. He was right about that. The irony is that while Mr. Higgins said that and Mr. Barroso got all sniffy about it, I spent yesterday in London talking to hedge fund managers and they said we are bonkers and asked why we did not burn the bondholders, that it was what we were expected to do and what we should have done. On the one hand, Joe Higgins is saying we should do it while, on the other hand, fund managers and real market people are saying we should do it but in the middle the Government claimed it was completely in thrall to the European Central Bank and capitulated to it. Let us tell Europe we will look after our own tax affairs, that we will be export-led and we will do so by cutting corporation tax and not taking notice of its diktats.

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