Show us the money… actually, don’t
20 January 2016 | 0
Here’s a scenario for you: imagine you opened your purse or wallet today and found an old lotto ticket in it. Imagine that you stopped off at the newsagent or supermarket on your way into work for something and you took out the ticket to be checked. Imagine that when you handed it over to the person at the counter and they put it under the machine, they started jumping up and down and shouted: “Congratulations, you’ve just won €7 billion.”
How many of you would stare back at the shop assistant and then reply: “You’re not giving me that. There must be some mistake. If you try to give me that money, I will take my case all the way to the highest court in Europe.”
Sounds mad, doesn’t it? And yet that’s exactly what the Irish government intends to do if the European Commission finds Ireland guilty of negotiating sweetheart tax deals with Apple and tells the government to recoup the money it should have been paid. And the weird thing is that lots of people here think that the government’s choice to turn down the chance of €7 billion or so makes perfect sense.
Really? Is Ireland such a prosperous nation that it can afford to not just ignore but actively oppose receiving a windfall of such generous proportions? If so, does that mean we’ve been misinterpreting the evidence all along when we view people sleeping on trolleys in hospitals or homeless families sleeping in temporary accommodation as concrete evidence of constrained government funding? Obviously that’s not the case, otherwise the government wouldn’t be refusing to acknowledge or accept an unexpected €7 billion windfall.
For argument’s sake, let’s just say that Apple and the Irish government made a mistake when they were calculating the tax implications of the company making this country its European headquarters all those years ago. We all make mistakes. But over those years, Apple has done very well out of Ireland (and vice versa). And with Apple’s estimated $200 billion in cash stockpiled overseas, it’s not as if paying $8 billion to a ‘friend’ would hurt that much. Especially as, if the EC does rule that Apple owes the money in unpaid taxes, it’s money that rightfully belongs to the Irish government (even if the government wishes that it wasn’t).
Despite much evidence to the contrary, the Irish government isn’t an entity that operates in isolation from the Irish people. Hard as it may be to believe sometimes, the government is elected by the people of Ireland to represent them. As such, if the Irish government decides to fight against the €7 billion windfall, it will be doing so purportedly on behalf of the people who elected it.
The funny part is that, according to reports, the EC decision is expected to be announced in March, right in the middle of the election campaign, a campaign where promises from most of the parties to reduce or eliminate the USC entirely (which has already been opposed by the IMF) will be set against the public services that the revenue collected from the USC could have been used to pay for (hospital beds, social housing, more guards etc).
Even satirists might struggle to imagine a scenario of an election campaign being fought with most of the parties seeking to abolish or amend an unpopular tax while emphasising the need for better public services but studiously ignoring or opposing an unexpected but welcome influx of funds that would make cutting USC and spending more on public services achievable. Only in satire would the best of both worlds be presented as the worst of all outcomes.
As for technology companies, Apple is not the first or the last to benefit from Ireland’s generous tax regime. And it probably won’t the last to be forced to cough up back taxes to Ireland if the EC finds against it. Does that mean all those technology companies will suddenly pack up and leave? I don’t know but I do know that if the politicians’ talk of Ireland as a digital hub with a young, educated workforce, expertise in ICT, world class research institutes and third level institutions, as well as membership of the EU, aren’t good enough reasons for a business to invest here then there’s a problem with that business.
As I have argued before, Ireland’s politicians or advocates need to be confident enough to argue the country’s case without being compelled to fall back on its low-tax regime. They need to have the self-assurance to promote the country’s major virtues without throwing in the monetary incentive of low taxation.
If the EC proves its case against Apple, they may well be forced to do so if they lose the lazy option of bribing them to come here. It’s disappointing that the Irish government won’t accept any EC decision for Apple to pay back taxes owed to the country and its people without a fight. I can’t help thinking that it would be much better for Ireland and its people if the government made a proper and passionate argument for investing in the country instead.