Base erosion and profit-shifting is a global phenomenon that requires a global policy response. In that context, I welcome the publication yesterday of the OECD report in the matter. Indeed, I would have welcomed a debate on the issue tonight, but it is clear from the content of the contributions made by the proponents of the motion and in the motion itself that there has been a reversion to type and a debate about Ireland’s corporation profits tax rate. That is not an issue being considered at all in the OECD report. We reverted to name calling of multinationals. We would do well to remember in the context of the debate that we are a small, open trading economy. We have an indigenous sector which, fortunately, is getting back on its feet and playing a role in the domestic and exporting economy, but equally a critical element of our economic recovery involves foreign direct investment. One of the things that foreign direct investors value is political and economic stability. I shudder to think of the message they would take from the proponents of the motion as to how safe and secure their investments would be were some of those proponents sitting on the front benches on this side of the House.
Deputy Joan Collins would do well to remember that foreign direct investment is, above all else, highly mobile. She would do well to remember that we take in approximately €2.8 billion in tax revenue under corporation profits tax. We are a peripheral economy. We are peripheral economically and geographically and one of the tools we have to use to our advantage is our corporation profits tax rate which, fortunately, is still a national competence. It is not something that can be imposed or dictated from outside. Long may that be the case and long should the Members of the House protect our economic sovereignty in that regard rather than cede it to the OECD, EU or anybody else. We would also do well to remember that the 1,000 companies involved, some of which Deputy Collins and others name-called and some of which give very valuable employment in my constituency, include Alps, VMware, EMC, Stryker, Boston Scientific, Google, Apple and Facebook.
They contribute more than 161,000 direct jobs and 274,000 indirect jobs to this economy. We would do well to remember that, per annum, they pay approximately €8 billion and account for exports of approximately €122 billion, all of which adds to the sum of economic activity. Without them, this country would be in a poorer place.
The Deputies’ message is that we are hostile. In a different debate, Deputy Pringle could excoriate the Minister of State over the lack of foreign direct investment, FDI, in the former’s part of the constituency when, without any shred of embarrassment, he saw no contradiction with that in his diatribe tonight against FDI and Ireland’s corporate tax rate. We cannot have it both ways. We need a mature debate on base erosion and profit shifting, BEPS, but that is a different matter from our sovereign entitlement to establish a 12.5% corporate tax rate. I accept that the effective rate is less, but some countries that have substantially higher headline rates have lower effective tax rates. We are competing for FDI. I salute IDA Ireland and the political support that facilitates it in promoting Ireland as the number one location of choice for FDI. This is down to myriad factors that we handle well, for example, our education system, tax system and political stability, and our position as an English-speaking eurozone member. We must be careful in what will be a necessary debate not to send the wrong signals to those with investments to make.
Recently, I accepted an invitation from a foreign direct investor, Pfizer in Cork, which provides much employment in the pharmaceutical sector. It has some operations in the Minister of State’s constituency. It made the point that, when facing significant challenges a number of years ago, it considered closing one of its plants. Companies close when they do not make profit. “Profit” is not a dirty word. Without profit, businesses close and people lose their jobs. We would do well to remember that because Deputies Joan Collins and Boyd Barrett would be the first to jump up and down if a significant foreign direct investor in their constituencies was about to leaveon the grounds that it could not make a profit in Ireland.
“Profit” is not a dirty word for large or small business. It is what keeps business and jobs alive. We would do well to remember this simple economic message. People on the far side of the House seem to have a difficulty grasping it.
In the context of the OECD’s report, I urge the Minister of State to be extremely careful as regards unilateral action and the choreographing of the requisite changes. We do not need to make martyrs of ourselves on the international altar. We need to address the issues that have been raised, but we must ensure that the choreography around minimum standards and common approaches does not disadvantage us. As with a phrase coined during the Northern Ireland peace process, we must ensure that people “jump together” at EU and OECD level on tax treaties and so on and that we are not disadvantaged by the legislation that will be necessary to underpin the report’s recommendations. We have not been dragged kicking and screaming. Rather, we have been an active participant in this process. Our economy and people who gain valuable employment in the FDI sector should not be disadvantaged. We should send the signal that their employment is welcome and that we intend to protect and attract inward investment.