Sean Barrett (Independent) | Oireachtas source

I welcome the Minister to the House. I wish to express my appreciation of what he said on Second Stage yesterday about the research and development issue and the note on the Department's website seeking a cost-benefit analysis of all that area. This was called for by an bord snip nua and by those who responded to the innovation task force. The State has been spending a significant amount of money in this area, both in tax breaks and in direct expenditures. An bord snip nua found academic articles to be the main output. Those who believe in it are very strong advocates, as I am sure the Minister's Department has found, but there is also the need to establish value for money. It is an important step by the Minister and his officials to commission this research. It is time to see the results now because, as the Minister said on Second Stage, the Exchequer has serious financial problems which must be dealt with and every penny has to be accounted for.

My concerns about the proposal is that the Minister is reducing from 75% to 50% the amount of research and development being undertaken. This might result in less research and development being undertaken. He is lowering the threshold so more people might undertake R&D but the key people might do less. The old section 27 will come under the review. I was trying to set the review in that it is an area where I think the fiscal advisory council should be involved and the regulatory impact assessment procedure should be used. There is serious concern and the Minister is quoted in some of the literature. These tax breaks are not costed properly. We do not know if the benefits exceed the costs and I welcome the exercise in this regard. Tax breaks are used by multinational corporations to seriously reduce their tax liabilities. The EU is looking at this practice. The Economist has written about it and the Starbucks case has surfaced in the UK. We have to know what these measures cost and this has not been the case heretofore.

I have seen references in the literature about international tax avoidance lawyers and accountants where they are referred to as fiscal termites, because of the damage they are causing to the tax base in many countries. International tax avoidance is a serious problem. I sometimes fear the growth of these tax schemes. Many of these special tax measures, often worth billions of dollars to some industry or even to a specific company, find their way into these laws and occasionally surface, surprising everyone, even those who had inserted them or lobbied for them. That is Mr. Tansi's analysis of why lots of exchequers are in financial difficulties.

While I appreciate the cost-benefit analysis commissioned by the Minister - I wish him well in that exercise - we need to have the fiscal advisory council involved and we need to revitalise the regulatory impact assessment, particularly where the tax base is being eaten by the termites. I strongly defend and support the Government with regard to the rate of 12.5%. However, if people are further eating away at the 12.5% rate, it presents problems for the Exchequer.

I abide by the ruling of the Chair in that my recommendation No.1 was ruled out of order because it would impose a charge upon the people. The object was the exact opposite. I was hoping my proposal would benefit the Exchequer. I think the Minister's cost-benefit analysis falls into that category also. It will benefit the Exchequer. Value for money is a vital consideration which everyone in this House shares. I share the Minister's aspirations in that regard. That was my concern about section 5 as it stands.