Alice-Mary Higgins (Independent) | Oireachtas source

I will be brief. I second Senator McDowell's comments on the effective tax rate and how it can be better. We can look to achieving this and, at this point of the year, we send an arrow towards next year's Finance Bill and the considerations involved in it. There is a question about the effective tax rate and how we can bring it forward but there is also a question about our tax reliefs. We need to have a more robust scrutiny of our tax relief measures. We should not simply say what are the benefits to a particular sector or business. Instead we should look at them with the same level of scrutiny we would give any other area of expenditure. As a whole, we might say that it is positive and there are benefits associated with it, but we should query how it compares to other areas of spending. When we discuss spending areas in this House, we are often told a particular area is a worthy one that could bring about positive benefits but that the Government is not sure we can afford it. In the area of tax reliefs, however, often there is not the same depth of scrutiny. This is not to be against tax reliefs but to ensure they are doing the work we need them to do. If we have an effective tax relief, that is one way to ensure it is not being exploited in an inappropriate way.

I have spoken in this House about the knowledge development box. There are questions about ensuring we are doing better at joining up the dots. The knowledge development box may have a positive benefit, but the problem with such a measure is that the tax relief is being made available and we are hoping there will be benefits arising from them but we are not tracking them. For example, in terms of the knowledge development box, I simply sought to establish if those who receive the benefit also work with, for example, Enterprise Ireland or IDA Ireland, to what extent they are large or small employers and where is the benefit so that we can track where we, as a State, deploy a tax relief. In the end, this is expenditure. It is money that could be in our Exchequer and routed towards another purpose. However, we have decided to forgo it because we believe there is a benefit to be had elsewhere. We should be more rigorous in our examination of those benefits. We would not forgo the money in any other area of our public expenditure in the same way and hope that a benefit would accrue.In many of our tax reliefs, there is a very clear argument of why they matter. I worry that we do not necessarily carry that same robustness through in all areas and I agree that in effect the tax rate is one of the key ways we can ensure we do not create inadvertent consequences of our tax relief and rationalisation measures.