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 Header Item Financial Resolution No. 4: Corporation Tax (Continued)
 Header Item Financial Resolution No. 5: Capital Gains Tax
 Header Item Financial Resolution No. 6: Capital Gains Tax - Deferral of Exit Tax

Tuesday, 13 October 2020

Dáil Éireann Debate
Vol. 999 No. 2

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Deputy David Cullinane: Information on David Cullinane Zoom on David Cullinane What we are dealing with in these resolutions is closing tax loopholes. Deputy Doherty proposed closing a tax loophole that essentially allows for multinational companies to offset capital allowances against 100% of their profits on intangible assets, which would raise €720 million. This loophole is very similar to some of those the Government now claims credit for closing and in respect of which the Tánaiste says it was not converted. At times, the Tánaiste represents everything he claims those on the left and those he opposes represent. He spouts right-wing populism and throws out the sound bite that Sinn Féin is against multinational companies. I have many friends and family members who work for multinational companies. Neither I nor my party would take any action that would put those jobs at risk. The Tánaiste knows full well that my party has not advocated an increase in the 12.5% corporation tax rate. However, we believe that multinationals should pay their fair share and that the tax loopholes should be closed.

The Tánaiste rushed for his base instinct when he heard Deputy Doherty again advocate that a tax loophole, of which only multinational companies can avail, be closed. He got a rush of blood to the head and did not fully understand exactly what was being called for. If he did understand, as he now claims, that is even worse because I do not understand how anyone could support this loophole which allows multinational companies to offset their capital allowances against 100% of their profits made from intangible assets. This is simply about making sure multinational companies cannot avail of additional loopholes, on top of the fact that many of them do not actually pay the 12.5% corporation tax rate. Many ordinary working people out there pay 40% PAYE on their earnings and many on very low incomes also pay tax. We all have to pay our taxes, including multinationals. It is very easy for the Tánaiste to sit there and accuse my party of being against business and multinationals when he knows full well that we do not believe the 12.5% should be increased, though other parties on the left have a different view and want to increase corporation tax. We have not called for that and we have said the rate should be maintained because we want to protect jobs. However, we believe corporations should pay that rate and should not avail of these loopholes. We do not make any apology for that.

If the Government had gone for that measure and taken in that €720 million, it would have been in a better position today to reverse some of the cuts it made over the last number of weeks to the PUP, the wage subsidy scheme, protections for renters and so on. That is what the Government has done over the summer months. It wasted the summer by not taking the opportunity to build up capacity in our health service but it certainly did not waste it when it came to attacking ordinary working people and paring back their payments. It could have taken the opportunity of raising this €720 million, although not by raising taxes because that is not what Deputy Doherty proposed. He was not proposing to increase corporation tax. He was proposing to close a loophole, one of many which are similar to those the Government has now tried to take credit for closing, even though it was dragged kicking and screaming on the double Irish loophole and the others. That was not closed because of clever tax lawyers, as the Tánaiste put it, but because of the pressure that came from people in this Chamber and others outside it who told the Government that multinational companies were availing of these loopholes. The Tánaiste may not have been a Minister at the time but we got the response from Fine Gael time and again that that was not the case, that multinational companies were paying their fair share, that the loopholes did not exist and that they were somehow a figment of our imagination. They were not. We were proven right and the Government had to close some of them but it has not closed all of them. It should take the opportunity in next year's budget to do what an Teachta Doherty has advocated on some of the other loopholes.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett In fairness, people other than Teachta Doherty have been making these points for some time. I am satisfied with the Minister's answer on this resolution. I am glad we have had the debate because I have raised this issue at the Committee on Budgetary Oversight and the finance committee over the past number of years. We never discuss tax reliefs in the same way we discuss expenditure, and we should because they are expenditures of public money in exactly the same way as the budget we discussed today is. They are exactly the same, yet we do not discuss them. Tax reliefs are a shadow budget that the public does not see and I suspect most Deputies are only vaguely aware of it but the scale is absolutely enormous. Just one of the categories in that shadow budget of tax reliefs, namely, intergroup transactions, is the same size as the additional expenditure in the entire budget we discussed today. That was €16 billion according to the most recent available figures. That is huge. There is massive fanfare and debate all over the country today about the fact that additional expenditure of €17 billion has been allocated in the budget, but the amount for just one category in a litany of tax reliefs is €16 billion. That money is all going to between 20 and 30 companies, and it is only one relief.

The research and development tax credit involves an amount of approximately €700 million per year. One would think that such a tax credit is a good idea but would that €700 million be better off going to Google, Facebook, Pfizer, Eli Lilly etc., or being invested in our public universities for research and development purposes? I would love to see a cost-benefit analysis of the benefit that has for society and the economy, particularly given the Covid pandemic, how little money goes into Science Foundation Ireland and how underfunded research is in general.

It is worth noting, because it will not get discussed anywhere else in the budget debate, that the amount of money for health research in the health budget this year is static. There is no change. Is that not interesting? In the midst of a pandemic and when we are desperate for therapies, vaccine research and so on, one would think that a significant additional amount of money would be put into health research but there is not one cent extra. However, hundreds of millions of euro are going into the pockets of some of the big, private, for-profit pharmaceutical and IT companies.

There are other credits that I will not even go into but of the €180 billion pre-tax gross profits for all corporations, tax is only paid on approximately €80 billion. Such is the scale of the reliefs provided. That is a scandal that needs to be addressed and discussed and we need to assess the benefit of those reliefs overall. The point the Tánaiste does not really address is whether we have really looked at what the benefit would be if we redirected some of them elsewhere.

I do not think corporations would run out of this country if they were made to pay the 12.5% tax rate or even a little more. They need to be in the European Union. For the most part, they want to be based in English-speaking countries and there will not be many of those left in the European Union after the exit of Britain, so where would they go running, just because they are made pay 12.5% tax? I do not believe it for a minute. We do not need to get down on our knees and beg these people. They are making an awful lot of money; staggering amounts of money. It would at least be worthwhile for us to discuss the shadow budget of tax reliefs and allowances as part of these budgets, and whether these public moneys should be expended in boosting public research, public universities, public infrastructure and public services.

  Financial Resolution No. 4 agreed to.

Financial Resolution No. 5: Capital Gains Tax

Tánaiste and Minister for Business, Enterprise and Innovation (Deputy Leo Varadkar): Information on Leo Varadkar Zoom on Leo Varadkar I move:

(1) THAT section 541 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended, as respects disposals made on or after 14 October 2020, by inserting the following subsection after subsection (6):
“(6A) Notwithstanding subsection (6), a gain or a loss accruing on a disposal of a debt referred to in that subsection shall not be a chargeable gain or allowable loss where the sum standing to the credit of the holder of the account concerned is transferred in whole or in part to another account of that holder in the bank concerned or in any other bank in the same currency.”.
(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

  Financial Resolution No. 5 agreed to.

Financial Resolution No. 6: Capital Gains Tax - Deferral of Exit Tax

Tánaiste and Minister for Business, Enterprise and Innovation (Deputy Leo Varadkar): Information on Leo Varadkar Zoom on Leo Varadkar I move:

(1) THAT subsection (9) of section 629 of the Taxes Consolidation Act 1997 (No. 39 of 1997) be amended, as respects amounts of tax referred to in that section which remain unpaid on or after 14 October 2020, by substituting the following paragraph for paragraph (a):
“(a) Simple interest shall be payable in respect of an amount of tax which is due and payable and which remains unpaid, and shall be calculated, from the specified date to the date of payment, for any day or part of a day during which that amount of tax remains unpaid (and by reference to the outstanding balance of that amount, as distinct from being by reference to an amount of a particular instalment due) at the prevailing rate specified in the Table to subsection (2)(c)(ii) of section 1080.”.
(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

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