Yes – Olly Donnelly, contributing writer
The European Commission’s decision to make the Irish government claim the tax that we, as Irish taxpayers, are owed by Apple is a positive step towards reclaiming control of our economy, and towards making corporations work for us rather than themselves. Allowing any company, not especially Apple, the opportunity to benefit from a “Sweetheart Deal” providing an effective tax rate below 1%, rather than the EU’s legal minimum of 12.5%, is wrong.
Source of revenue
Practically, it denies a huge amount of tax revenue to Irish people that could be efficiently spent in many parts of our economy, especially in times of austerity. Principally, it is not helpful or desirable for the Irish economy to be based around pandering to the desires of large corporations.
Despite the fear-mongering, Apple won’t leave because we take the cash we’re owed, so this is just money for nothing.
Apple owe a little more than €2800 in tax to every person in the Republic of Ireland; roughly equivalent to an Apple Watch, an iPhone 7, a MacBook Pro, an iPad and some headphones for everyone in the country, with cash left over at the end.
Put another way, that’s roughly enough to double state spending on healthcare, pay 10% of Irish citizens the average salary outright, or enough to erect a 280 Tonne statue of Tim Cook at the top of O’Connell Street, made from pure gold.
While it is true that apple provide significant benefits to Irish people just by being in Ireland – frequently expressed in the form of 5500 jobs – defenders of the company both ignore the massive quantifiable difference the tax owed by Apple would make, and also fail to give a concrete expression of the scale of the benefits provided to Ireland by the company’s presence here.
Does the the net gain of apple being here – essentially tax-free – outweigh the huge benefits provided by the owed taxes?
How important is the current rate of corporation tax?
It’s understandable that the Irish Government would want to preserve an environment that would make us an attractive outpost for the world’s biggest companies, but to do this at the expense of claiming the most important dividends of these corporations seems like an idea borrowed from a free market ideology rather than a balanced look at the actual costs and benefits.
It’s true that extremely low rates of tax have been a factor in creating a tech and finance orientated economy centred in Dublin, but they haven’t been the only factor; we’ve invested in education and local Irish start-ups, and we’ve been incredibly lucky to be the focus of things like the Web Summit and Moneyconf. We have built complex tech infrastructure in our colleges and invested in the people that work in the sector.
Companies like Apple, Google, and Dropbox rely on the skills that we can uniquely offer by virtue of having thrown ourselves in this direction as a national economy, and to claim otherwise and not take what we are owed for this, would be selling ourselves short.
Moreover, as Ireland will inevitably continue to charge companies the bare minimum of corporation tax within European Law, it seems unlikely that Apple, who will require a European base, will see it fit to move from a European country that fought for their right to evade tax to another that didn’t, and this is particularly unimaginable given all of our existing infrastructure.
Perhaps you’re reading this and thinking about Britain as an option, post Brexit. It’s feasible that companies like Apple could up-shop and move to somewhere like Britain in the long run, but this seems unlikely when Britain has a much higher corporate tax rate than Ireland, and an uncertain economic future, especially as to whether it can function as a base in Europe for global companies.
If the European Commission want to stop Ireland from defying them, it seems ludicrous to think that they will offer Brexit terms to Britain that will be conducive to them stealing the European tech economy.
A principled tax policy
Let’s completely ignore the practicalities and likelihoods of Apple’s tax evasion for a moment though. It is wrong in principle to let a particular company evade tax for the sake of the people in a country who themselves pay tax. 58% of the respondents to a poll on thejournal.ie have said we should take the money.
Public opinion seems to dictate that we should honour the EU’s decision, but our elected government have appealed in spite of this, pandering to the interest of a large foreign company rather than the people who elected them.
And pandering to companies like Apple is a profoundly undemocratic step; it says that our government is willing to take a back seat in the running of our country and economy, and allow our economy to descend into an uncertain corporate free-for-all, based on the idea that more money we don’t control is better than a little less money that we do.
I’ve already touched on the services that we could offer if we take this money, but imagine all of the services we won’t be able to offer in the future if we don’t. It is also immoral to demand that we should take money from the income of our citizens to fund a tech infrastructure that will be used and abused by large companies, from whom we will demand nothing in return.
Finally, it would be politically disastrous for Ireland to defy the European Commission on this ruling. As a small country and economy, we are reliant upon our position in the European Union and our ability to play nicely with other countries.
Laws and rulings like the one we’re in defiance of are designed to stop countries in Europe from outcompeting each other in a race to the bottom that benefits nobody, and repeatedly defying these laws and rulings can lead to sanctions and ostracisation from the group.
In the case of Britain, repeatedly asserting they could ‘go-it-alone’ and maintaining a defiant exceptionalism provided few benefits, and let to many of the political factors that made the British people vote for Brexit: If British people felt that everyone was ganging up against them in Brussels, that was mainly because they refused to play the game by the rules that everyone else wanted to play by.
If Ireland do the same thing, we may not like how the EU, as a body, chooses to respond.
We are owed money that could be spent well in making the lives of Irish people better. We are losing political control to an angry EU and a cartel of self-interested Multinationals. We are better than the bargain bin economy our government want to sell us as.
We have to take a bite out of Apple.
No – Orlaith Darling, Staff writer
To those people who are using the Apple issue to call for a “fairer and more equitable” hike in Irish corporation tax, I implore you to please open even the most basic of economics books. The Apple controversy arises over the fact that Apple, completely legally, has been rerouting their profits in European stores through their headquarters in Ireland in order to pay as little tax as possible.
However, in the 2014 Budget, the Dáil announced its intention to close the loopholes that enabled firms such as Apple to operate in Ireland on a paper basis, thus avoiding taxes. Firms that were already availing of such loopholes were, however, allowed time to restructure their processes, and this is why Apple has not yet stopped.
However, the call to increase Irish corporation tax heralds much wider and more daunting implications for the future.
Many people cannot understand the Irish government’s reticence to recoup €13 billion worth of tax from the Apple headquarters in Ireland, as ordered by the EU. In the Irish Times, Fintan O’Toole argues that low corporation tax is a thing of the past anyway, and that Ireland must step in line with EU standards.
But the fact that Irish corporation tax tradition may be a “thing of the past” is precisely because of constant EU pressure to strip Ireland of one of its most important economic decisions. During the height of the recession, the EU, Germany and France in particular, endeavored to bully the Dáil into increasing Irish corporation tax to their levels of almost 30%.
Such an attempt, when Ireland was in the midst of austerity and economic stagnation primarily due to German banks, is evidence that, on this issue, the EU does not have Irish interests at heart. Rather, if Ireland raise their tax levels, we will no longer be distinguishable from Germany as a place of business, and our sole economic advantage will be jeopardised.
We will be left to contend with the disadvantage of being a small, open economy on the outskirts of the EU, who has just been left in the lurch by their biggest trading partner.
The Moral Question
Though Apple’s deal may be legal, many feel that large firms should be forced to pay more tax on a moral principle. This may well be the case in an ideal world. Sole traders who pay huge amounts of tax may well be incensed.
Firstly, we must remember that the figures circulating about how little tax Apple are paying in Ireland are based on the denominator of their worldwide sales, not just their Irish ones, or even their European figures. In terms of worldwide sales, Apple pay a significant amount of tax here.
Secondly, if Apple were to go, there would be no Apple tax paid to Ireland whatsoever, a loss which would be recouped by the government in taxing other earners in the country even more.
Thirdly, as previously mentioned, the sweetheart deal with Apple lapsed in 2014, and so they will slowly begin to pay more tax, a trust-process which would be destroyed by claiming €13 billion.
The EU’s argument for recouping €13 billion in Ireland is that the government were offering unfair state aid to Apple above its competitors. This rule was introduced at an EU level to prevent monopoly.
On this, Moore McDowell, Professor of Economics in UCD, begged the question, “So which other firm, which other competitor of Apple, is being harmed? Because there isn’t one.” He goes on to argue that, if it was the morally correct thing to do, and we took the €13 billion, where would we be in ten years, when another boost was needed?
The moral question that is truly at the centre of this debate is that the EU wishes to bring Ireland into line on this issue, then slowly raise our 12.5%, no matter what the consequences for our long term economic health.
“The death warrant of Irish industry”
The idea of increasing our corporation tax from 12.5% would be the death warrant of Irish industry. Firstly, it is not as though all multinational corporations do not pay corporation tax. The Revenue analysis of last year’s corporation tax showed that about four-fifths of all corporate taxes for the same year were paid by non-Irish businesses.
Ireland relies on multinational industry. According to Enterprise Ireland, The World Bank’s ‘Doing Business’ report rates Ireland as the easiest EU location to start a business. Moreover, Ireland was rated the best place in Europe to do business by Forbes magazine’s 2011 “Best countries for business” report.
Ireland is attractive to large multinational corporations and they are a necessary pillar of our small economy.
We must remember that the government’s fiscal policy has serious limitations. Fintan O’Toole notes that the €13 billion could be spent on a three year waiver of USC, a topic of debate in the current government. This suggestion illustrates the short-term effects of taking the money, and changing our corporate tax system.
That is to say that any measures taken with the Apple lump-sum would have to, in the future, be backed up by the tax-payer’s money. USC, or a similar tax, will have to eventually be reintroduced, council housing that could be built with €13 billion will have to maintained by the taxpayer, and so on.
If the Dáil accepts €13 billion, it is setting a precedent of fiscal policy. That is to say, our monetary policy, bolstered by investment from firms like Apple, is pushed onto rocky ground. The EU will be allowed to dictate both our fiscal policy, in forcing us to claim tax, and our monetary one, in stripping us of our attractiveness to foreign investment.
Apple itself, while in Ireland, must consume Irish goods and services of all descriptions, and its employing of Irish people endows them with spending power. Both result in a multiplier effect on the economy.
Investment (Foreign Direct Investment or FDI) in Ireland by foreign corporations is exponentially magnified in Irish economic growth, and it is vital that we continue to encourage such investment.
Countless other jobs are supported by more Irish people being empowered to spend by employers such as Apple, and other multinational corporations. This increased income of the country leads to more consumer demand, which is met by more supply, and an increased GDP.
As such, if a message is sent to Apple, and other firms like it, such as Google, Yahoo, Intel, Amazon, Dell, Ebay, Facebook, and countless others, that Ireland is no longer an ally of business, our national income will fall.
This will be felt on an individual level in households all over the country, not just restricted to the innumerable employees of such firms.
The implications of this for the future are alarming. Our presently burgeoning IT sector will stagnate. Educated graduates and entrepreneurs will leave the country. The infrastructure that has been necessitated by multinational corporations locating in Ireland will develop no more.
Therefore, petitions, such as Uplift.ie, urging Michael Noonan, “As the Minister for Finance you have a duty to protect and safeguard the interests of every man, woman and child in Ireland” are failing to recognise that by protecting our corporation tax, he is doing just that.
Illustration: T. Pigeon