Check against delivery
I welcome debate because it gives all Deputies an opportunity to outline their views on an issue which has deep economic and social importance. Due to the manner in which the Commission chose to issue its ruling and the initially shambolic response of our government much of the commentary is only now getting beyond empty sloganeering.
We continually hear the incorrect claim that what we are talking about is the opportunity to grab a large pot of money for the Irish Exchequer. As we have already heard, there are Deputies determined to sell the idea that vast numbers of problems would be solved if only Ireland refused to appeal the judgement.
This is a complete distortion of a situation which in reality poses a potential threat to the long-term maintenance of employment and funding of public services. It is a clear and present threat to Irish workers in the private sector and the funding they generate for services we all rely on.
One must take together this judgement, the statements of the Commission and other leaders, the use of distorted and one-side evidence, and the proposals now being pushed on corporate taxation. When you do there is no doubt that this judgement is a core part of trying to remove the opportunity for competition between member states in the taxation of companies.
A five year investigation, including an unprecedented and targeted trawl of Revenue files has produced an assertion but no evidence. It not been shown that there was selective treatment for one company. The refusal to acknowledge how the company involved is one of our largest employers and is our largest tax payer confirms that this was not a detached judgement.
Given the evidence available and the obvious attempt by the Commission and others to promote a damaging agenda on tax, Fianna Fáil fully supports a robust and comprehensive appeal against this judgement. We also support a more active and assertive diplomatic and media effort to push-back against the attempt to falsely accuse Ireland of unfair competition.
We believe that it is in Ireland’s vital long-term interest to defend a corporate taxation system which is the only credible route for creating and sustaining high levels of well-paid employment and funding vital public services.
And let us all be clear of a simple fact – there is not one extra cent available to this government or the 32nd Dáil to spend in any Budget which will come before us. Irrespective of our participation in an appeal, the legal battle will go on for up to six years. The problems we face as a country today remain to be dealt with and there is no golden pot being withheld.
In fact, the complete opposite may be the case. Any significant damage to Ireland as a reliable location for inward investment could lead to deep and permanent damage to employment and public services.
While it is clear that a majority of the Irish people and a majority of the members of this House reject the attempts to demonise Apple and Ireland, unfortunately there are those here who are actively promoting a false story about multinational investment and tax. Most of these are Deputies who claim to represent the interests of workers but arrogantly dismiss the concerns of hundreds of thousands of workers in multinational firms – many of whom have been making these concerns known over the last week.
The attempt to paint Ireland as a rogue nation on tax has been ongoing for decades. It has been in place since well before any of the measures attacked by the Commission existed. In fact it’s been in place since before many of our largest firms even existed.
It is wrong on every level to claim that Ireland is competing unfairly.
This is a country which believes in helping business to grow, create jobs and innovate. And we have done this on the basis of policies which are fair, legal and found elsewhere.
The myths about how we in Ireland tax company profits keep growing and need to be nailed.
The current uniform 12.5% rate replaced a more complex system which also levied different rates on different types of activity. It is a low rate, but by no means the lowest. What distinguishes it from other countries is that it is transparent and it has had long-term political support. In contrast to countries where policy is constantly changing, Ireland has provided a long-term security on which to base major investment decisions.
According to the World Bank, which has studied corporate taxation for many years and applies a uniform methodology to all countries, the effective tax on company profits here is 12.4% – making Ireland one of a small number of countries where the statutory rate and the effective rate are nearly identical.
In contrast, the effective rate in 60% of countries is far lower than the headline rate. In France a 33% official rate is compared with a 7.4% actual rate.
The difference between Ireland and France is that Ireland does not have a wide series of extra deductions and Ireland does not apply selective treatment in its application of the law. It is extraordinary that the Commission has yet to investigate whether such major disparities distort competition between firms.
The World Bank also rates Ireland as having high compliance with tax law and as the 6th most efficient in the world in terms of bureaucracy.
Where Ireland is also distinct from other countries is that we do not add large amounts in extra taxes.
The economic impact of our approach to corporate taxation, and that of other small and medium-sized countries, on the EU as a whole is tiny. It is completely irrelevant to the causes and needed responses to the recent recession.
These inconvenient facts have unfortunately not stopped other trying to use our approach to corporate taxation as the reason they have failed to secure investments.
At different times I have had the privilege of working with our public servants in seeking major investments from multinational companies. It is sad that the Commission and some countries don’t understand how often Ireland has won investment for Europe against Singapore, Puerto Rico ,Switzerland ,Israel and other countries which are our real competitors.
The argument that Ireland is providing a tax-free, libertarian haven for multinationals is simply nonsense. There is no doubt that abuses arose particularly in relation to what were termed ‘stateless companies’, however they were far from unique to Ireland and they have been addressed.
And it is not now, nor has it ever been, Ireland’s legal or ethical duty to attempt to unilaterally assume the role of the world’s tax collector irrespective of the economic and social impact on Ireland.
In this debate and over the last week we have heard parties and Deputies claim that an industrial policy which includes multinationals has failed and is unsustainable.
Well this model supports hundreds of thousands of jobs and it pays for teachers, nurses and pensions in every part of our country. What’s more it has done so for decades. It has directly enabled significant falls in absolute poverty and rising living standards. It has not created a country without problems, but it has done more than any credible alternative industrial policy.
One of the amendments before us talks about “the failure of industrial policy” and the need to move to a “Socialist industrial policy”. This is a continuation of the election platform put forward by the Right2Change group in February and signed by Sinn Fein and most of our hard-left and left-adjacent Deputies.
It really is worth taking the time to look at exactly what the alternative being proposed to current pro-enterprise policies actually involves.
The policy formally signed by every Sinn Fein TD and the others calls for an increase in taxes on business of €8 billion per annum. That is no partisan attack – it is the cost which they themselves have published.
They also demand full employment which, they say, will be based on direct public employment, non-profit corporations, co-operatives and labour-managed firms.
Not one single mention of job creation in the private sector other than to radically increase taxes on private employers.
So when we hear the demands for an end-to our pro-enterprise policies and an end to seeking multi-national investment, the reality is a stark one which advocates that Ireland try an industrial policy which has failed so often and so catastrophically that even communist-run countries have abandoned it.
Sinn Fein of course has two entirely contradictory policies. On the one hand it claims that it wants to take the money and leave everything else untouched – but on the other hand it wants to demand higher taxes from employers and put all efforts into a radical left industrial policy. The softer policy is what we get when that party is busy raising money from American corporate executives in the Waldorf Astoria – then they are all sweetness and light talking about how much they love America. It’s just that on every point of substance, domestic and foreign, the reality is of an increasingly ideological left-wing, anti-enterprise and anti-private sector workers policy.
As recently as June Sinn Fein’s MEP Matt Carty angrily denounced his own country in the European Parliament and demanded that Ireland be forced to increase revenues from multinationals. In fact attacking corporate taxation in Ireland is the one and only area where Provisional Sinn Fein has demanded greater action by Europe in the 40 years since that party was founded.
Apple didn’t come to Ireland because of the supposed sweetheart deal condemned as illegal by the Commission. It has been here for 36 years. The specific tax rulings involved were made before any of the products which made it the largest company in the world were invented. The tax rulings were made before there was an iPhone, before the App Store was created and when Apple was making a fraction of the profits it makes today.
The available evidence suggests that the Commission is flat-out wrong in claiming that the company paid 0.005% in tax in 2014. Apple paid over €400 million to our government alone and it is adamant that it had a worldwide tax rate of over 25%.
It is an innovative company, which has been a long-term and committed investor in Ireland from its earliest years and through periods of both consolidation and expansion.
Tax rulings are an absolutely common, reasonable and ethical part of the tax code of nearly every country. This is based on companies seeking clarity on what taxes will be owed under given circumstances.
In the case of Ireland, such rulings are made by an entirely independent agency with no official or political involvement whatsoever. The Revenue looks at the law and applies a fair and consistent interpretation.
The implication that our Revenue was acting selectively to favour one company over others is completely unacceptable. That a five-year trawl through Revenue’s files in an effort to find a legal target produced such a slim and tendentious case is striking.
What the Commission is seeking to do is to establish a new standard for applying competition law to taxation matters. In effect they are saying that any provision which allows for profits generated internationally to pass through a jurisdiction without being taxed is unfair to firms which are not international. By definition the Commission’s ruling is a selective one targeting multinational companies which invest into Europe.
Once again the Commission is unfortunately seeking to legislate for a world which has long-since ceased to exist. For a decade and a half it has sought to beat a European drum against international firms devoting huge time and resources to railing against the outcome of technological developments.
Ten years ago the Commission was focused on the idea that Microsoft had achieved a permanent monopoly in internet browsers and office software. The absurdity of these claims was obvious even then.
Competition authorities also obsessed over the idea that Intel had a monopoly of processing technology for personal computers.
Today they have failed to learn the lessons of the technology era and are focused on Apple, Google, Facebook and other technology leaders.
They are making Europe a cold house for many innovative companies.
The process by which President Junker was chosen was borderline ridiculous and unfortunately he is supporting a policy which is designed to win headlines rather than strengthen Europe.
Any judgement which defines tax measures which are available generally to companies as “selective” is a threat to both rates and national competency on the area of corporate taxation.
It is a back-door attempt to achieve what has been rejected in a series of Treaty negotiations.
The risk to Ireland is simply too big to ignore.
We must fight this judgement by every means possible – which includes government showing a more urgent, coordinated and professional engagement with the issue.
The shambles of last week must not be allowed to happen again.