Apple Tax issue: “national sovereignty and revenue control” – eh? September 6, 2016Posted by WorldbyStorm in Uncategorized.
Reading the SBP was an entertaining experience this weekend.A range of views on offer, but most pitched towards the Government line, albeit with a further twist of euroscepticism on offer. So we get Tom McGurk who conducts an entirely imaginary conversation with Commissioner Vestager where she delights in ‘putting manners on you’. For him this is an issue of ‘national sovereignty and revenue control’. And for those who might take a different approach….
While some have tried to argue about the technicalities of the Commission’s case against Apple and Ireland, we shouldn’t’ be confused’.
Oh no. For…
Brussel’s intent is unmistakeable. It is determined to maintain a high-tax, high-spending social democratic model and in the process crush minnows like Ireland who date to make themselves more attractive to potential job-creators.
And this morphs into a paean of praise for the British…
It’s very early days yet, but who doesn’t envy those who have now taken back control of their own country and their own lives? Isn’t it interesting too that the fear factor, so predominantly involve during the Brexit referendum, has so far proved to be not much more than an illusion.
Well, given Brexit hasn’t actually started to happen it is indeed very early days yet. But it takes some brass neck to ignore the very likely potential ramifications of the Brexit. And ‘control’? If the rather mild sharing of sovereignty that membership of the EU entails upsets McGurk he must presumably find that of the GFA equally galling. And yet, and yet… Actually perhaps he might put aside time to reflect on that letter from Japan to the UK government at the weekend. Seems they’re unimpressed by an UK Outside the EU when they were previously sold by said UK the benefits of access to the single market. The Guardian suggested this may be but the first of many such letters from various states across the globe. Feel the control. Slipping away.
Meanwhile I can’t help but notice this:
Whatever about the veracity or otherwise what Vestager had to say last week, her tone, her attitude and the overwhelming sense of authoritarian threat meaning from her was disturbing.
Ultimately he hopes for an Irexit (seeming to believe that the UK simply by lowering its corporate tax rate will become more attractive than this island, seemingly unaware that it is our membership of the EU that is part of the appeal for foreign ‘investors’). – and let’s be clear he’s not envisaging one based on social democracy, or anything very leftist. Best of luck with that Tom.
What’s odd though is how little that ‘veracity or otherwise’ concerns him. In the course of his column he pays literally no attention whatsoever to what the state of our tax affairs in this state actually is. He just takes it as read that it is entirely correct for Apple (and other multinationals) to conduct their affairs and this state with them in the way they do.
But then I guess if one believes that the EU is a social democratic holdout, rather than a somewhat more complex beast perhaps I shouldn’t be so surprised.
Oddly it is Noel Whelan, of all people, who provides a salutary argument against this line:
They [Government politicians, industry representatives and Revenue spokespeople now responsible for persuading the Irish people on this issue are closeted in groupthink] are also seeking to crudely stoke up the suggestion that the European Union is infringing on Irish sovereignty. They fail to appreciate that most Irish people have a problem with the notion that Ireland used its sovereign tax-collecting powers to make or tolerate an arrangement which enabled one of the wealthiest companies in the world to evade paying tax on so much of its earnings.
Eamonn Delaney is, if anything more heated than McGurk (and thinking about it Michael McDowell in the same edition is there or thereabouts ‘We have to fight once more for our independence’). For him ‘we can’t surrender to Brussel’s’ and on he goes. His economic approach can be summed up neatly, by himself, as follows:
Let’s face it. We all know there was a reason we welcomed Apple being in Ireland and why we have a low corporate tax rate. It is the lifeblood of our economy, and if that tax rate needed to be lowered even further, I’m sure we’d probably do it. After all a former finance minister(and visionary) Gerard Sweetman, cone proposed a zero per cent tax – zero per cnet! – for the Shannon development zone, so as to boost badly needed investment and job creation in the late 1950s and 1960s.
And he continues, apparently oblivious too to how things have changed:
This is how Sweetman and mandarin TK Whitaker kicked off our long-overdue industrialisation and economic regeneration. Without FDI we are doomed, and if the EU stops us using tax breaks to bring in multinationals, we may as well follow the Brexiters and leave the meddling Brussels superstructure immediately.
Hmmm… that seems a very simplified run-through of that history. And also, even giving him the benefit of the doubt, it doesn’t seem to occur to him that once said industrialisation is achieved, and regeneration, matters aren’t meant to proceed as if they hadn’t. Though even he must admit:
Not that we don’t have an over-reliance on FDI, but that is another story.
You don’t say. But notice how for him this is about jobs, not tax. Jobs, literally, at any cost, including tax. He actually seems to overstate the number of jobs too…
‘In reality we should let Apple keep their tax and stay in Ireland and continue providing tens of thousands of jobs, along with other MNC’s. Again being charitable perhaps he means Apple and other MNCs, but Apple didn’t employ tens of thousands in 2014, indeed 4,000 at most in Cork directly and ‘2,500’ more indirectly. That’s nothing to sniff at. But let’s not overstate matters either.
Anyhow, he’s not fussed by €13bn. No not at all. With remarkable, some would say rather tasteless loftiness, he dismisses this sum entirely;
Why do they think the solution to our shortfall sis spending more money? It is quite the reverse. For example, the more money that goes into our health service, it seems, the more the problems are compounded by further bloating management and bureaucracy and by reinforcing the vested interests and work practices of unions and consultants. It is efficiencies we need. We had billions sloshing around during the high-spending Tiger years and look where it go us. We are still paying for our largesse with uncompetitive costs and a welfare culture that has the highest number of households in the EU without an earner. That’s what easy money does – and a populist political culture to spend it.
If that seems a risible run-through of the economic collapse and crises… well, yeah, it is.
Anyhow, thankfully there are more measured voices on hand in the SBP. Voices like Sean Whelan who notes that…er ‘patriotism is the last refuge of the scoundrel’. I’ve often wondered at that line. Surely it often is the first refuge… and that’s not to diss the genuinely patriotic. He continues:
When it comes to the matter of corporation tax, beware the patriots – especially the patriots in expensive suits.
The Apple judgement is one of two hammer blows that have hit this country… the other was Brexit. In their response to the former, some have begun linking to the latter – the Commission is attacking Ireland’s corporation tax regime, so it’s time for us to have a referendum to leave like the British.
That is what some are presenting as the patriotic response. It is also deeply illogical. US multinationals are in riealnd for two main reasons – low taxes and unfettered access to the single market. Leaving that market to protect the tax regime will not keep the multinationals here and encourage more to come. They need to sell products and services into a richer market of 500 million people; they want to pay as little tax as possible. But they have to pay something somewhere.
And he makes a crucial point which others ignore, about the actual power relationships involved here.
Post-Brexit Britain might just about have the economic heft to lever a half-decent market access deal out of the EU: post-Irexit Ireland will not. Does anyone think low-tax FDI-hungry Britain will out so the Paddies get a good deal too?
All so that US multinationals can continue with tax practices that most citizens regard as unacceptable.
And he makes the point that if ‘the Commission suffers enough political and repetitional damage, the Eu as a whole could suffer economic damage as member states slug it out between themselves in a melee of protectionism and tax-cutting with no economic referee on the field. Is this in the Irish national interest?’. How others, like McGurk or Delaney face that prospect with any equanimity escapes me. Do they think that an Irish exit, even putting aside the fact our nearest neighbour would be trying to undercut us simply ‘cos it is in its best interest, wouldn’t have such knock on effects.
And he makes a further interesting point that in some ways the Commission has ‘won’ in so far as one of the largest MNCs has been named and to an extent shamed, and that this tightens the screws in regards to future regulation of this area. Of course, for us on the left that won’t be enough and nor should it be, but as an educative moment in regards to pointing up the manner in which our interests as working people diverge from the supposed ‘mainstream’ it has its uses.
And just on that, Stephen Kinsella, also in the SBP suggests that following on the distorted growth figures recently published, the fact that Apple’s impact on those and what ‘one company in one fiscal quarter can do to this state gives you a sense of the size of Apple and the scale of the kinds of tax avoidance Apple has been involved in. The authorities have just not been quick enough to close off these loopholes.’ But he also asks in light of the number of MNCs here, pharma and tech in particular, ‘how many other ‘Apples’ are out there?’. What an interesting question.