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Finance Bill 2014: Second Stage (Resumed) (Continued)

Wednesday, 5 November 2014

Dáil Éireann Debate
Vol. 856 No. 2

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(Speaker Continuing)

[Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty] In respect of corporation tax, the Minister says that:

The problem with the so-called "double Irish" from Ireland's point of view is that it has that name. People think that something we do here gives rise to it. That is not the case. It arises from tax codes elsewhere and the way in which the USA regards certain arrangements. We do not operate any kind of tax haven. Our position is legitimate and the 12.5% rate is applied here.

I wonder whether he recognises his own words. I could quote other comments he made in response to my questions on this subject in which he clearly indicated that the Irish Government can do nothing to the tax code that would end the double Irish, yet fast forward to budget day when he stated:

The so-called “double Irish” is one of many such schemes. I am abolishing the ability of companies to use the “double Irish” by changing our residency rules to require all companies registered in Ireland to also be tax resident in Ireland.

Well, fair play to the Minister. Finally he has listened. I wrote the legislation for that reform two years ago. I raised the issue with the Minister and others in the Joint Committee on Finance, Public Expenditure and Reform, where I pointed out that we had to examine what was done in 1997 and apply it in the context of current tax residency rules. He told me it could not be done. He told this Dáil - it is a serious issue to mislead the Dáil - that nothing can be done in the Irish tax code that would end the double Irish. It is on the record. At my instigation, the aforementioned committee reviewed the issue of corporation tax. After all of its work, it still did not have a clue about the subject. Members thought the double Irish was something that could not be ended. That was because every time I raised this issue, people from the Minister's party, including in particular the Minister of State at the Department of the Taoiseach, Deputy Dara Murphy, heckled, sniped and accused me of being anti-jobs. I wonder if the Minister of State would accuse the Minister, Deputy Noonan, of the same practices now that he has given in and listened to sensible proposals by ending something that was causing immense reputational damage to this State.

  The problem with the double Irish and what is proposed in this Finance Bill, however, is that the Minister has given a sweetener to the companies concerned. If they establish here after 1 January 2015, they will automatically be tax resident in this country, which means they had three months from budget day to establish their companies here. If we are to believe what we read in the newspapers, a flood of companies are being set up here to benefit from another provision in the Bill which gives companies incorporated here but not tax resident until 2020 to get their affairs in order. Five years from now, they will be made tax resident here. If the companies that are not currently established here get their act together before 1 January, they will be able to avail of the double Irish for a further five years. That is simply not good enough. At a minimum, he should ensure that the effective date of application for the measure is budget day. I do not think he will do that, however, because he has engaged with the industry and I am sure he has signalled to them that they should get their act in order.

  This head in the sand approach has not done the State any good. Sinn Féin is clear in its support for the 12.5% corporation tax rate but we will not stand for genuine companies having to pay 12.5% while others are able to avail of tax avoidance schemes that reduce their liabilities to low single digits. This is being done with the support of the Government because it has not closed these loopholes. The Finance Bill proves for once and for all that the Government had the ability to stop this practice at any time in the last several years instead of blaming it on other tax jurisdictions. Of course, it is related to the way other tax jurisdictions interact with us but we could have made a move to stop it. I will not go into the Apple investigation but the Government should have taken it on head first instead of waiting for the European Commission to conduct its investigation. We should have pre-empted the Commission by starting our own investigation.

  In regard to tax avoidance, the Bill contains an entire section which deals with people involved in deliberate tax avoidance schemes. Someone who is deliberately involved in a tax avoidance scheme will at present incur penalties and interest if the Revenue finds out. The aforementioned section tells these tax avoiders, who are breaking the law, that if they put their hands up they will not incur surcharges and their interest payments will be reduced by 20%. How dare the Minister introduce such a provision at the same time that he is telling people they have to pay up for charges they cannot afford? People who cannot afford to pay the household charge are being pursued by Revenue through the courts but the Minister is amending the law so that people who were deliberately involved in tax avoidance schemes of a huge magnitude will not be subject to surcharges or the full interest liability. That is an absolute disgrace. We should be increasing the penalties on people who are involved in deliberate tax avoidance of this magnitude. Revenue should be strengthened by an additional 100 staff, as Sinn Féin has proposed, to ensure those who are involved in such tax avoidance are pursued and that the penalties, interest and surcharges are applied. This is revealing of the Minister's attitude. I am aware that previous amnesties have brought money into the Exchequer but is this the time to give amnesties to tax avoiders? Should we not be sending a stronger message to the effect that they should pay tax or face additional surcharges?

  The special assignee relief programme, SARP, again reveals the Minister's priorities. This scheme is an utter disgrace. When it was first announced, the Tánaiste and Minister for Social Protection stated that it would be linked to employment and that everyone who availed of it would have to prove that in the region of 20 jobs would be created. There is no such requirement anymore. Why does the Minister believe an income of €500,000 is not good enough? Are people who earn €1 million asking the Department of Finance to allow them to write off 30% of their entire incomes for tax purposes? Is he giving a listening ear to such individuals? Does he not get what 200,000 people were saying on Saturday? I realise his comments were very dismissive of them but does he simply not get it? Part of the problem is that the public is not aware of these measures. They are all contained in the Finance Bill but they were not announced on budget day and they will never make the media headlines.

  I welcome the Minister's statement that office holders will no longer be able to write off their water charges and household charge liabilities against the dual abode allowance. Let us go further, however. Tell me -----

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt The Deputy should speak through the Chair.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty Can the Minister tell me why is it fair that a Minister who stays in a hotel in Dublin to attend the Parliament can have the cost of the hotel written off for tax purposes - I have no problem with the cost of the hotel - and also write off the cost of maintaining a second residence in the hotel? Riddle me that. When I asked Revenue what it means to maintain a second residence in a hotel, the only definition it could provide pertained to laundry expenses. It is madness. The write-off is worth €2,500, which would launder a lot of Y-fronts, shirts and socks.


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