Thu, Nov 12, 2020
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Speaking in relation to the Withdrawal of the United Kingdom from the European Union Bill 2020, Neasa highlighted some issues with the changing landscape of financial services and taxation that we are likely to see arise in a post-Brexit Europe.
Minister I welcome the bill tabled today and I would like to take a moment to highlight some issues in relation to the changing landscape of financial services and taxation that we are likely to see arise in a post-Brexit Europe. Because although this Bill is sorely needed it is also a missed opportunity to implement more robust measures in the sector of financial services and taxation,
In all the current uncertainty surrounding Brexit and the negotiations there is one thing we can be sure of - Brexit will result in change. Change in our relationship with our closest neighbour of course, but also change in the balance of relationships, with both the rest of our European colleagues and the global community.
The drivers of Brexit can seem nebulous and obscure - a sense of exceptionalism that finds a voice in patriotic bluster, a feeling of dissatisfaction with the status quo? The social reasons may be various but there is an identifiable underbelly to Brexit, which is about deregulation on the provision of goods and services, a loosening of the constraints in the financial services sector and possibly a repudiation of the global move towards data protection.
In the context of taxation I suspect that Ireland will soon have to choose whose side we are on. Do we align ourselves with our partners in the project of a single market and a shared vision of Europe or do we continue down our current path as a place of accommodating tax measures for the largest global companies and their profits.
In October, the United Nations’ Committee on the Rights of the Child announced that they were going to examine Ireland’s tax policies to see whether they are negatively damaging the rights of children around the globe, particularly in developing countries. Their argument is that our laws, Ireland’s laws, are enabling profits to be shifted from the developing world and devastating those countries’ ability to raise revenue, fund essential public services and fulfil their human rights obligations.
A recent working paper from the US-based National Bureau of Economic Research identified Ireland as the number one profit shifting destination, accounting for more than $100 billion alone.
The UN Convention of the Rights of the Child (UNCRC) obliges Ireland to avoid policies at home and abroad that undermine the human rights of children. This will be the first time ever the UN will examine the external impact a country’s tax policy on children, and the fact they are starting with Ireland is testament to how we are beginning and already being viewed internationally.
Is this how we want to be viewed in a post Brexit world with a large and increasingly deregulated financial market at our shoulder. A tax haven? A facilitator of tax injustice? Tax injustice that damages children and communities in the most vulnerable places in the world.
I know the arguement that Ireland is engaging with ongoing reforms at the OECD and through the Base erosion and profit shifting framework. And yes, Ireland has engaged extensively with Beps, but crucially we opted out of a key provision. We opted out of Article 12 of the Multilateral Instrument which would have put an end to one of the most commonly used avoidance practices by US multinationals in Ireland. If we wanted to reach out to our European neighbours and align ourselves with them and the global community we could be engaging in this process in a more genuine manner.
Due to Brexit we amend our taxation laws min significant ways as this Bill demonstrates. Now is the time. Ireland must align taxable profits more closely with economic activity and prevent multinationals from exploiting our laws to reduce their tax bills. As outlined by a number of NGOs in Ireland it is obvious that without a fair and functioning taxation system, the efforts of other countries to deliver adequate housing, healthcare and education and to tackle poverty, child poverty and inequality are badly undermined. Badly undermined by Ireland.
We must act as responsible members of the international community and ensure our tax policies are not negatively affecting the realisation of children’s rights around the globe. With our nearest neighbour about to embark on a unique path towards economic isolation I would urge this government to decisively move towards international solidarity with Europe, with developing nations. Solidarity on taxation, on tax justice and to reform our current laws to reflect that.