Order of Business: Development Aid and Corporate Tax Rate
Cathaoirleach, I was recently given the honour of being nominated to the Parliament Assembly of the Council of Europe on behalf of the Dail Technical Group and independent senators. While attending the Assembly session in Strasbourg last week I also had the opportunity to chair a workshop for the European Parliament’s Committee on Legal Affairs in Brussels. Ireland’s leadership and presence in Europe is critical our Presidency of the European Union and having just returned from this context I wish to raise a matter for debate which is related to Ireland’s priorities for the Presidency.
During statements on this year’s Budget I raised some concerns in relation to Ireland’s corporate tax rate and its impact on developing countries as well as the impact on our own public services. There is a significant difference between the nominal rate of corporation tax of the 12.5% and the effective rate of tax that multinational corporations operating in Ireland actually pay. Due to various tax breaks that are available to multinationals the effective tax rate for many corporations, according to some sources, is as low as 5% or 6%. Minister Richard Bruton responded to this recently, countering that the effective rate is as high as 11.9%.
Locating a subsidiary in Ireland is, for many multinationals, a crucial part of their tax avoidance or ‘tax minimisation’ schemes. Developing countries lose more to tax avoidance by multinationals than they receive in aid –with Christian Aid putting the figure as high as €160billion dollars per year. Our own public services are also affected with SME’s contributing to the maintenance of the public services that sustain their businesses while multinationals avail competitive advantages such as tax breaks and simply freeload off these services. Such practices have recently come under scrutiny in France and at parliamentary hearings in the UK. One of the things to emerge from these hearings is that compliance with standards as laid down by the law (and the OECD) can result in unethical practices or unfair outcomes, as Minister Joe Costello has admitted recently. And in the Minister’s view the issue should be dealt with through Brussels.
The Programme for Ireland’s Presidency acknowledges that the EU provides more than half of global development assistance. The Programme also states that one of the priorities of Ireland’s Presidency is to ensure that the EU’s financial assistance to developing countries is as effective as possible. I would like to ask the Leader to invite Minister Joe Costello into the House to debate the effectiveness of development aid in light of our corporate tax rate. Thank you.