Ireland: “Transnational corporations use Ireland as blatant Cayman Islands-like tax scam”

Health, education and poor countries biggest losers – – Joe Higgins, Socialist MP

The following debate over corporation tax in Ireland, between Joe Higgins, Socialist Party (CWI) TD (member of Irish parliament), and The Taoiseach (Irish Prime Minister), took place in Dáil Éireann (Irish parliament) on 7 March.

“Transnational corporations use Ireland as blatant Cayman Islands-like tax scam”

Dáil Éireann, Leaders’ Questions, 7th March 2007

Joe Higgins (The Socialist Party):

RTE’s [Irish state television] "This Week" programme recently highlighted a scandalous aspect of corporation tax policy in this State. The Government enables transnational corporations to use this country as a blatant Cayman Islands-like tax scam essentially to take billions of euro in profits made in many countries around the world, launder them through the Irish Republic to avail of one of the lowest corporation tax rates in the world and avoid paying hundreds of millions, or probably billions, in tax in countries where the money was actually earned, including in the Middle East and Africa. In 2005, one company, SanDisk, notified €106 million profit in this State with eight employees.

When the Ansbacher gang [a previous tax scandal by a company in Ireland] was channelling its money offshore, there was loud condemnation here, and rightly so, over its tax evasion and avoidance while care for the old, sick and handicapped was crucified for lack of resources. The Taoiseach’s corporation tax policy is depriving hundreds of millions of people, including people in very poor countries, of substantial tax revenues which their health and education services desperately need. He is also facilitating massive tax avoidance by Irish multimillionaire tax exiles, although these patriots make the sacrifice of abandoning their far flung luxury mansions to tug the Taoiseach’s sleeve every summer in Galway [Western Ireland] – no doubt to ensure he will continue to allow them to skim on taxes.

This morning Allied Irish Banks and Cement Roadstone Holdings announced that they raked in €3.78 billion in profits, last year, paying a relative pittance in tax in this State. Incredibly, we hear Irish semi-State companies are using ghost companies in Amsterdam to avoid paying taxes.

The Taoiseach has created a tax paradise for big business and the super rich but he will not pay the nurses their due. We have the second highest pupil-teacher ratio in primary schools in the European Union. We have desperate parents who cannot access services for children with special needs allegedly for lack of resources.

From his answers to the previous two questions, I note the Taoiseach is in script mode big time. I ask him to leave aside the script and say if there is any other way to describe the corporation tax policy of his Government except to say that it is utterly immoral.

The Taoiseach [Irish Prime Minister]:

Whatever about me being in script mode, that is the classic script of those in Europe who criticise the Irish tax system and want to harmonise European taxes. That is the classic script of an attack on our system. the same countries are envious of our ability to run a good economy and to generate 800,000 jobs. I am sad to see the Deputy, who normally fights the cause of working class people to have work, would adopt the right-wing view of some French and German people…….As for any breaches, our revenue laws are as tough as anywhere in the organised world. Every country has its own tax laws and the Revenue Commissioners have all of the powers granted by this House and many issues over the years have strengthened that position.

I have no involvement in, nor can I comment on, the tax affairs of either individual companies or State bodies in respect of their dealings with the Revenue Commissioners. Revenue does not comment either. However, all companies, including commercial semi-State companies, are entitled to organise their tax affairs in an efficient and legal manner to minimise the amount of tax payable. This is the manner in which commercial companies operate throughout the world. Our taxes are no longer the lowest in respect of corporation tax as some European Union member states have zero taxes. Elsewhere, countries, such as Singapore that has a zero rate, are probably receiving most of the foreign direct investment nowadays. Other countries have tax efficient mechanisms whereby they have higher headline tax rates but then do deals with major companies and multinationals. This is the order of the day.

The position of the Department of Finance is set out in the code of practice in respect of the governance of State companies. State companies are obliged to follow that code and it is a matter for the authorities to pursue any that do not so do. I am aware the Deputy has taken his information from the Irish Mail on Sunday, which published an article stating that three State companies, namely, ESB, An Post and Aer Rianta, have avoided corporation tax by moving more than €90 million through the accounts of the Dutch holding companies. This is a matter for the relevant Departments and boards to investigate. I do not have details in this regard.

However, our corporation tax regime is a far more transparent system and method of dealing with tax than is the case in most European countries. An ongoing campaign has run for 20 years about some of our operations. Our financial services regulators and companies are continually watching for anyone who abuses the system. However, Ireland is not alone in using tax efficient ways of doing things. There are tight laws and regulations and, in the case of any breaches, the Central Bank, the Office of the Director of Corporate Enforcement, the Revenue Commissioners and other agencies are designed to try to control them. However, Deputy Higgins should not fall into the trap that is again being revived by those who want to see a harmonised tax system……They permanently pick on Ireland, in the main because they do not want to make reference to some other countries to which they are more closely allied. There are plenty of them and I note that in the French election we have again been taken out and used to be kicked around by those who should know better.

J. Higgins:

As a matter of fact, it is the right wing that cuts corporate taxes, not the left……Of course people in the European Union criticise the Taoiseach’s corporation tax policy. Why would they not? The Taoiseach has been instrumental in causing a race to the bottom in corporation rates within the European Union and in a wider sense. For example, the Taoiseach has cosseted, in the same manner as everyone else, Proctor and Gamble, which is a fabulously profitable corporation. However, its workers are being put through the wringer today because much wants more. Apparently, although Members have not heard the latest, it wants to abandon Ireland for other pastures, where a corporation tax rate of zero applies – the direction in which the Taoiseach’s policy is going. There will be a bitter fruit to be reaped from the Taoiseach’s corporation tax policy. One sees the spectacle of the likes of Mr. Gates of Microsoft, who struts the world stage as a magnificent philanthropist. However, he avails of Ireland’s tax law for blatant tax avoidance—–

An Ceann Comhairle [Parliament Chair]: The Deputy’s time has concluded.

J. Higgins: —–assisted by the Government. This mirrors the Irish tax exiles, who are the Taoiseach’s friends and who also strut around Ireland raising funds for worthy causes. However, were they to pay their due taxation, such causes would be funded ten times over without being obliged to go to them with a begging bowl.

F. McGrath:

Hear, hear.

J. Higgins:

The Taoiseach’s corporation tax policy is unsustainable not in the long term, but in the immediate future.

Mr. Roche:

That is absolute rubbish.

The Taoiseach:

It appears as though everyone in Ireland is my friend this morning. If Deputy Higgins is advocating that State agencies which employ thousands of people, such as An Post and the ESB, should put themselves at a disadvantage by not availing of legitimate tax schemes to minimise their tax liabilities—–

J. Higgins:

Tax scams.

F. McGrath:

Hear, hear.

The Taoiseach:

There are bodies to investigate tax scams. If the Deputy asserts that the law as it stands is wrong, it is obvious that he disagrees with it. I remind Deputy Higgins, who obviously has forgotten what he said on two occasions, of the following. Ireland has lower taxes – although they are no longer the lowest because countries such as Estonia and other new member states have extremely low corporation taxes – which are very straight line and we do not make deals with companies as do other countries. We are taking in hundreds of millions more and the very projects advocated by the Deputy are funded in this manner.

J. Higgins:

The Taoiseach is stealing taxes from Africa, the Middle East and poor countries. That is the situation.

The Taoiseach:

This is how we have been able to take on thousands of extra—–

Mr. Martin:

Every country in Europe has its own system.


An Ceann Comhairle:

The Taoiseach, without interruption.

J. Higgins:

The Taoiseach is depriving the poorest of the poor of their due tax.

Mr. O’Donoghue:

There is 100% employment.

The Taoiseach:

As we receive hundreds of millions more in tax revenue than was the case previously, we are able to put far more money into employing nurses, doctors and other paramedical staff, as well as thousands of teachers. I know this is not consistent with the Deputy’s policy either. The Deputy would like to have exorbitantly high taxes, high unemployment and huge poverty—–

D. Ahern:

And deprivation.

The Taoiseach:

—–and then he would be happy because the policies in which the Deputy believes are the policies of discontent.

J. Higgins:

The Taoiseach should do me a favour and return to his script after all.

The Taoiseach:

Is that not why the Deputy was thrown out of the Labour Party? He wanted always to have things bad and if things are good, it does not suit him. He is now trying to attack multinationals.

J. Higgins:

The Taoiseach is now on a rant.

The Taoiseach:

This is what the Deputy believes in. In fairness, the Deputy is consistent. If the sun shines, he wants to see rain. He has always been like that. I understand that and fair play to him. He has been consistent for 30 years.

Mr. O’Dea:

Although the Deputy is 100 years out of date, he is consistent.

J. Higgins:

The Taoiseach did not deal with the issue.

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March 2007