As the Tax Justice Network has noted in its weekly email summary of tax justice news:
A recent editorial in the Irish Times demonstrates an extraordinary shift of opinion in one European tax haven. Ireland has for many years staunchly defended its corporate tax policy as being key to the economic development of the country. Attacks on Ireland's tax haven status have been interpreted as an attack on Ireland's right to share in a prosperous global economy.
Telling its readers that the county can no longer afford the damage being done to its reputation by Ireland's tax haven policy, the article - which would have been unimaginable in a major Irish newspaper even a few years ago - concludes:
“There is a broad consensus that Ireland must defend its 12.5 per cent corporate tax rate. But that rate is defensible only if it is real. The great risk to Ireland is that we are trying to defend the indefensible. It is morally, politically and economically wrong for Ireland to allow vastly wealthy corporations to escape the basic duty of paying tax. If we don't recognise that now, we will soon find that a key plank of Irish policy has become untenable.”
I admit that I have been saying this for a long time. I have always argued that the 12.5% tax rate was like the 'Sale' sign on a shop window: it was an invitation to come in to see what deals were on offer, and Ireland had them aplenty. Now those deals, from that with Apple onwards, are unravelling. What is apparent is that the Irish economy is geared around a foolish tax arrangement that lets profits flow through, but not stay in the country. Paul Krugman has rightly called the result 'Leprechaun economics'.
Are the Irish now smelling the coffee and realising more substance is required, most especially as they see the shambles on their doorstep that is Brexit? I hope so. The Irish Times may just be signalling a very important change.
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I don’t think you should treat this as a major shift in Irish public opinion. This leader in the IT is just another piece of quintessentially Irish hypocrisy. Since the editorship of Douglas Gageby the IT has projected this illusion for the benefit of some of its international audience (and some deluded souls in Ireland) of being on the centre-left while working hard to maintain its position as “the paper of record” and to pander to the right and centre-right which has an effective monopoly on political and economic power in Ireland.
The calibration of Ireland’s corporate tax policy will take place well behind the scenes and be decided by senior government ministers and officials and representatives of the MNEs operating in Ireland and of the major accountancy firms as they assess the likely unfolding of the turf war between the OECD as it progresses its BEPS reforms and the EU as it seeks to maintain its preeminence in these matters while keeping an eye on developments in Washington DC. It’s not difficult to guess whose interests will be protected most jealously in these deliberations. Hint: it won’t be those of ordinary PAYE taxpayers or those of citizens excluded from economic participation.
Noted
But I still think words matter – and come back to haunt us
I should know…
I agree. But it is ireland after all. And Ireland doesn’t really do accountability – except in extremis. I don’t wish to be too hard on the IT. The market is very small. It’s already stuggling financially (as are most press organs). And the centre-left constituency is simply too small in Ireland to provide a revenue base. At this stage most Irish people are immune to the disingenuousness, the dishonesty, the hypocrisy, the projections of optical illusions and the attempts to suspend disbelief that are perpetrated by all media organs and public bodies.
“This leader in the IT is just another piece of quintessentially Irish hypocrisy”
It’s nice to know that Albion doesn’t have the monopoly on the adjective “perfidious” then!
I agree wholeheartedly with your headline Richard. We will do ourselves and the wider community of nations a disservice with a similar attitude to Ireland’s current tax arrangements.
I have two brothers who live in Eire. One works and the other has ended up looking after his severely disabled daughter whom he had with an Irish partner.
They tell me that unless you are very or young very old, life there is quite hard at the moment. And there is a lot of frustration with politics.
The only thing that has helped the infrastructure there is EU money – local people we talk to think that the country is still backward (the word used is ‘shite’ BTW) especially away from the larger towns/cities. The roads are mostly very poor and the social housing around Dublin looks like some of the most badly managed I have ever seen.
There is a great deal of discontent and questioning of established norms going on – look at the recent revelations concerning part of the hierarchy over there – the Catholic church.
But this is also a country that recently expressed how liberal it could be with gay issues for example.
I’d say that southern Ireland at least has a population that senses they could be doing better than they are. The young are sick of having to leave and find their fortunes elsewhere. They want modernity and that takes investment – tax funded investment.
There might be some substance to the IT’s headline and I welcome it. Let’s see what happens.
Pilgrim Slight Return says:
December 11 2017 at 1:29 pm
“….. thing that has helped the infrastructure there is EU money — local people we talk to think that the country is still backward (the word used is ‘shite’ BTW)”
Interesting how language is flexible. As with the present use of the word ‘alignment’. It might mean something, and then again it might mean something else or nothing at all.
I mention this in relation to the word ‘shite’ which translates more broadly hereabouts to mean ‘not actually as good as it perhaps should, or could, be.
Except in the common expression ‘white shite’ where snow is likened to an albino version of excrement. 🙂
Maybe the Irish are more canny than you think. Maybe they knew all along that Apple or Amazon or whoever would be forced to pay the tax.