Labour Party amendments today will move us from lip service towards action to deliver tax justice.- Howlin
The Labour Party will seek to amend the Government motion before the House today.
My party supports in principle the decision of the Government to appeal this case.
At one level, it has not been an easy position to reach.
The prospect of an additional 13 plus billion of revenue is certainly an attractive one.
But in reality that is all it is – a prospect.
This case will be appealed by the Apple.
It will be determined by the European Courts.
And it is simply nonsensical to suggest that we should not be party to an appeal while the reputation of one of the most important agencies of State is under review.
The only way this money becomes available to Ireland, is at the end of the judicial process.
This is true today. And it was true a week ago when the decision was announced.
I am confident that the Irish people understand that too.
I have spoken to many of them over the past week.
Frankly, the easy thing for my party to do would be to take a populist line.
But it wouldn’t be right and it wouldn’t be in our country’s long term national interest.
€13bn is a lot of money but it represents only two years of corporation tax payments and 6% of one year’s GDP.
While the size of the figure has shaped much of the debate, it is true that there are bigger issues at play here.
The Labour Party did not play a central part in putting this economy on an even keel just to play politics with it now.
Apple will argue that they arranged their tax affairs in correspondence with rulings afforded them by our Revenue Commissioners.
Make no mistake there are reputational issues at stake here.
And as a small open economy hugely dependent on FDI repuational issues such as these are important to us.
The position of the Irish authorities – and I think it should help the house debate this matter rationally that these are administrative rather than political decisions – is that no special arrangement has been afforded to this company.
Having known and worked with Irish Revenue for three decades – I accept their word on that matter.
And on the face of it aspects of the Commission decision are troubling.
They seem to want to interpret the law as it is now, as opposed to how it was at the time.
They want the Revenue Commissioners to collect tax on moneys not earned in this jurisdiction – to the point of issuing a call to others to come and knock on our door for their share.
They know well that this is a problem that has its origins in the interaction of different tax codes on a global level.
And yet they seem to believe that Ireland, a small nation, should carry the repututional hit for correcting this problem.
We are told this is an investigation under state aid rules.
Yet the lion’s share of the commentary this week in Europe has been about taxation levels – the same sort of commentary we’ve heard for many years about our corporation tax policy.
It is a dishonest charge against us.
But it is the mud that sticks because it is thrown so often.
The truth is that this state collects higher than average revenue from corporation taxation, and implements at a national level an effective rate higher than other countries with bigger systems of reliefs that don’t seem in the Commission’s view to amount to state aids.
As Dan O’Brien and other commentators have pointed out, there is a growing trend in European Commission rulings to find against smaller countries, while ignoring potential breaches by larger countries.
That should give every member of this House pause before automatically rushing to agree with the commission.
The reality is that Ireland has been an upfront and honest engager in the processes established to address the wrongs of excessive international tax practice.
I am proud to be a member of a Government that put an end to the Double Irish.
Ireland has been uniquely successful in attracting Foreign Direct Investment.
Our corporate tax levels have been part of the attraction over past decades, but we have moved to compete for FDI on a much broader basis in recent times.
And FDI remains important to our economy and our people.
It is regrettable that the Government has not sought to properly engage with the opposition on this matter.
We have not seen the ruling of the European Commission. And yet we are expected to vote on it here today.
I’ve served in this House for some time.
But in all my time, I cannot recall a situation where a Government moved a motion seeking the agreement of this House, without at least offering them a confidential briefing on the matter at hand.
Dropping a physical copy of a briefing note effectively into the post after close of business yesterday doesn’t amount to a proper briefing.
There’s no excuse for such obfuscation on an issue as important as this.
What’s more, the Government knows that.
This isn’t a minor procedural matter.
Members of this House represent the people of Ireland.
If new politics is to have any meaning; if collective decision making is to be real in any sense, then our side of the house cannot be left without possession of all of the facts while others receive secretive briefings.
Notwithstanding that, the Labour Party is proposing an amendment to this motion which is entirely reasonable.
Indeed, it is so reasonable that the Minister of Finance has acted overnight to give partial effect to one of the clauses.
The first part of our amendment insists on continuing Government support for the so-called Base Erosion and Profit Shifting, or BEPS process.
In a globalised world, international action is the only viable mechanism for moving towards tax justice.
In Government we insisted upon Ireland’s continuing support for this work by the OECD.
In opposition, we continue to do so.
The second part of our amendment recognises that the work we carried out in ending the double-Irish is not done.
We have made progress over the last few years.
Some of the loopholes that allowed the creation of stateless corporations have been closed.
And there is no doubt that this work fed into an increase in the tax taken in from corporation tax – which rose from €4.6bn in 2014 to almost €6.9bn in 2015.
But to regard that works as done would be foolish.
The moral outrage we have heard over the last week about companies who avoid paying any tax despite generating massive profits is justified.
We cannot expect families to pay their fair share of tax if companies don’t.
And so the Labour Party motion calls for the ending of further loopholes in our tax code that facilitate the aggressive avoidance of tax by profitable companies.
I welcome the reaction of the Minister, who has responded overnight to the concerns raised, and has announced significant amendments will be made to section 110 of the Taxes Acts.
The practices of vulture funds in Ireland over the last couple of years have been unacceptable.
The dirty deal that was done in the case of Clery’s, cast experienced workers aside overnight;
And has made a Dublin landmark look like a ghost ship.
The action of the Minister is welcome.
But it is not enough.
And that is why the Labour motion also asks that the forthcoming Budget include measures to ensure a minimum effective rate of tax for all profitable companies.
We have a low rate of corporation tax.
That is part of the offering made by a small island nation to entice some of the biggest companies in the world to come here and create jobs.
It has worked. Not as a single measure – the education levels of our people, our ongoing competitiveness, the quality of life in Ireland, the language we speak and investing in our infrastructure have also played a part in attracting these companies.
And it is in that context that Labour argues that we can do more.
12.5% is fine. But it must mean 12.5%, and not a fraction of that.
Thanks to work done by my colleague Joan Burton, Fianna Fáil belatedly realised during the crash that minimum effective rates of tax should apply to wealthy individuals.
What we seek now is simply that the same principle apply to businesses.
If a company doesn’t make a profit, it doesn’t pay tax. Few would argue with that.
But if a company is making a profit after reasonable investment in infrastructure and people, then they should be paying a fair share of tax.
The Labour Party will publish detailed proposals on this matter in advance of the budget.
And at that point, members of this house will have the chance to amend or oppose the detail of those measures.
For today, we are seeking support for just the start of this work – an agreement by the representatives of the people that all profitable companies should pay a real rate of tax that is reasonable.
The final part of the Labour proposals is perhaps the most important, and the least exciting.
The Government acknowledges the need to have an overall review of our corporation tax regime.
But they are making the same mistake others have made in the past – to presume that a one-off review will solve all problems.
Issues like the abuse of section 110 were not created by design. But the abuse of that section, which some corporate law firms have openly advertised on their websites, should have been stopped before now.
Whatever changes we apply to our tax code, there are many people employed to find new loopholes.
Based on our experience, it seems odd to suggest that they won’t succeed.
And so again, the Labour Party proposal in this area is a modest but effective one.
We want to create an independent commission, sitting on a permanent basis, that will continue to examine the loopholes being exploited, and suggest ways to close them down.
There is no reasonable case that we should not continuously examine how to prevent aggressive tax avoidance.
The Labour Party amendments today will move us from lip service towards action to deliver tax justice.
We stand for levying a fair rate of tax on everyone – companies as well as people. And for spending the revenue that we raise from such taxes fairly.
I hope that after all the debate, others will agree that the Labour Party amendment is a reasonable one, deserving of support across this House.