A new alliance is to call today for a review of Ireland's "flawed and outdated" tax regime for oil and gas exploration.
The alliance aims to campaign for a "restoration of the balance in Ireland's favour" regarding fiscal conditions. The group involves the Green Party's marine and natural resources spokesman, Mr Eamon Ryan; the Sinn Féin marine spokesman, Mr Martin Ferris; the Socialist TD for Dublin West, Mr Joe Higgins; the independent TD for Mayo, Dr Jerry Cowley; and Mr Padhraig Campbell of SIPTU's offshore oil and gas committee.
The 1992 Finance Act allows for a 25 per cent corporate tax, and no royalties or other production-related levies. The group says the corporate tax rate is the lowest in the world, and tax write-offs "effectively wipe out any take for the State". Frontier licences awarded to oil companies can be held for up to 20 years, with "no onus on the oil companies to use an Irish port for their operations or to use Irish jobs, goods or services," the group says.
"The highly lucrative, value -added aspect of jobs, goods and services is the main economic benefit to an oil/gas producing country," the group says. "However, most of the employment and services are currently contracted out elsewhere, with benefits going to other jurisdictions."
It cites the Faroe Islands as a model for the future, with licences lasting only one year and conditions that ensure all related activities are of benefit to the islanders.
The group says it is also concerned about the environmental aspect of offshore and onshore oil and gas related activities. "With new deepwater production technology and new seismology available that shows massive potential for commercial oil and gas discoveries, it is imperative that the 1992 terms are radically changed to reflect the new situation." This is particularly important, the group says, in view of the Government's decision to open up large new areas on the west coast.
The group says the State currently "relies totally" on information provided by the mineral companies on drilling operations. The State should maintain its own independent monitor on a full-time basis on rigs operating in these waters, it says.
At a press conference in Dublin this afternoon , the group will call for the immediate scrapping of the 1992 legislation, and replacement with up-to-date terms and conditions.
The Department of Communications, Marine and Natural Resources has said that Irish licensing terms are similar to those operating in other European states, including Britain, Denmark and Holland. "While the Irish tax rate is lower than in these other countries, this reflects the significantly lower success rate of oil and gas exploration here," the Department has said.
