A Tax Is The Best Form Of Defence

at

Crickhowelldan

From top: The ‘fair tax town’ of Crickhowell, South Wales; Dan Boyle

Robin Hood,  the Double Irish and level playing fields.

Let’s talk about tax.

Dan Boyle writes:

Last week my itinerary took me to a picturesque small town/large village, Crickhowell, in south eastern part of Wales. Going around this country I get to see many pretty villages. I had come to Crickhowell to learn about its recent brush with notoriety.

Local businesses had come together to examine how collectively they could become a legal entity to avoid paying Corporation Tax, as multi national corporations have succeeded in doing for decades.

It is an idea simple in its inception yet so brilliant in its potential. This self styled Fair Tax Town can, and I believe will, become a beacon for a wider Fair Tax movement.

As someone Irish witnessing this phenomenon I can’t help but to admit some slight feelings of ambivalence.

Over the years, at Green meetings in Europe, I had always argued that Ireland needs to be considered a special case. An island nation at the periphery of Europe, a creative corporate tax policy was our attempt to counter the competitive disadvantage of not being part of the European land mass, in having lower distribution costs by being closer to the largest population centres.

And I believed it. In the way that many of us come to believe in the myth of Irish exceptionalism.

Being a World leader in the practice of tax tourism, Ireland could create a short cut in manufacturing national wealth figures that held as little depth as the paper on which they were written.

Many corporations now have Ireland as their mailing address. Their presence isn’t without some advantages. Access to certain industries have become fast tracked, new skills and technologies have been acquired in larger numbers.

And yet there could have been, and may yet be, a better type of industrial policy for Ireland. One that takes longer to bear fruit in terms of tax receipts but would be more sustainable, more rooted in our infrastructure, more capable of withstanding the whims of the global economy.

Here’s an idea. Let’s use the taxation system to develop a distinction between the types of corporations that exist from those who physically make things to those trade in services. Exempt those who make things. They build up our manufacturing capacity. Tax service industries who by their nature are ephemeral.

This is where a Robin Hood Tax could come into play. Designed as a tax on financial transactions, it could just as easily be applied to trade in intellectual properties. Of course it would need to be international in its application.

The OECD is at present engaged in an exercise seeking to bring about a level playing field in relation to corporation tax. It’s a fruitless exercise. The mobility of capital makes it impossible to secure the tax liability of multi national corporations. Their liability can only be enforced through an international mechanism.

In phasing out out the Double Irish tax loophole, Ireland is starting slowly to move away from its reputation as a tax tourism locale. Our reputation could be better improved if we were to contribute to an honest international debate on fair tax.

Dan Boyle is former Green Party TD. Follow Dan on Twitter: @sendboyle

50 thoughts on “A Tax Is The Best Form Of Defence

  1. Clampers Outside!

    “Let’s Talk About Tax”
    (Punch it, Dan)
    Yo, I don’t think we should talk about this
    Come on, why not?
    People might misunderstand what we’re tryin’ to say, you know?
    No, but that’s a part of life

    Come on

    Let’s talk about tax, baby
    Let’s talk about revenue and me
    Let’s talk about all the good things
    And the bad things like the H, S, E!
    Let’s talk about tax
    Let’s talk about tax
    Let’s talk about tax
    Let’s talk about tax

    Let’s talk about non-doms to all the people at home or abroad
    The tax keeps leaving anyhow
    Don’t decoy, avoid, or make void the tax
    Cuz that ain’t gonna stop it
    Now we need to talk more about tax on the radio and video shows
    Many will know anything goes
    Let’s tell it how it is, and how it could be
    How it was, and of course, how it should be
    Those who think it’s dirty have a choice
    Pick up with the Revenue, stop those passports, or charge jet parking fees
    Will that stop them, DOB? I doubt it
    All right then, come on, spin it

    (Next week, DOB in ‘Getting Jiggy With Tax’)

    1. Anne

      very good..

      I got as far as this – “Last week my itinerary took me to a picturesque small town/large village, Crickhowell, in south eastern part of Wales”

      Like what’s the context? Is he on holidays? My itinerary is gonna take me to the bathroom for a dump like..

        1. Anne

          Oh right sorry. My itinerary doesn’t allow for proper reading sometimes.

          Read it all there.. Agree with Dan. If only our EU masters saw it the same way as Dan does though.

  2. Rob_G

    Of course it would need to be international in its application.

    – a nice idea, but this would be where it falls down. I’m not saying its fair that companies like Apple pay an effective tax rate of close to zero, but neither do I think it’s fair that Germany (pop. 80m) and France (66m), who have had decades of a head start and a much larger population base than Ireland, telling us that we need a more-level playing field.

  3. Gaoithe

    If Ireland is held up as an example of cheap corporate taxes, it’s mainly because Irish tax is transparent. France, Britain, China, India, etc have convoluted tax systems that hide equally low tax payments by multinationals. What we need to look for is total tax transparency. Don’t hold your breath, though.

  4. ahjayzis

    I don’t *really* have a massive problem with our low corpo tax rate.

    I’d make the same argument that the Shannon area or Connemara should get to undercut Dublin on business rates because they’re at a geographical disadvantage – it’s something that’s done within countries all over the world where the periphery adds sweeteners to balance investment away from the core, I think we can make that argument for countries as a whole on a larger scale.

    But I want them to actually pay the 12.5%, I want it to be what it says on the tin – not an effective rate of 2 or 3%.

    And we need to stop skimming the profits made in other countries – it’s theft and totally undermines us when this is talked about – and we don’t even benefit since they’re then diverted on to Holland and then to Bermuda or whatever way it works.

    Coming here for a comparatively low corpo tax? Grand. Coming here to cheat us and multiple other countries out of tax receipts used to pay to educate, house and power your employees? Feck off.

  5. nellyb

    The biggest problem with ‘effective tax administration’ is the murder of competition locally. Anyone who ran or still runs local business will agree to that (to a different extent, depending how they are plugged in to the private network of public money distribution). Frequent loss of skills (to multinationals) is a serious issue.
    Second biggest is starving public infrastructure of funds. 12.5% is indeed an affordable tax. Ageing Godron Gekkos should appreciate this lovely and very friendly percentage and shut up about how poor the Irish public transport is, access to services or how difficult it is for their employees to rent a commutable/affordable place in the capital or other cities.
    I wanted to have a balanced conversation about it with FG canvassers last weekend, but they didn’t bothered knocking on the door, only a leaflet in. Likely prohibited by them Elders advisers :-)

      1. nellyb

        I would somewhat disagree :-), when FGs smell personal windfalls, their brains work like atomic clock. They can do debits and credits faster than your accountant.

        I (selfishly) wanted to debate with them until their tongues started slipping into admission :-)

        I guess i should be happy they don’t knock on the door, hand me a banjo and ask to play “Dualing Banjos” from Deliverance. Because that’s what they truly think of us, the voters.

  6. ethereal_myst

    I have no problem paying my fair share of taxes if it is spent wisely and goes towards efficient public services….but until I see evidence of that please don’t ask for more

    1. classter

      This is the fallacy that undermines any idea of public services.

      You starve the beast, then you complain that services are not at the standard you desire.
      So, you starve the beast further.

      1. ethereal_myst

        I would agree except the beast isn’t being starved, taxes are being paid but the “beast masters” are wasting them and then asking for more

  7. Huh?

    The OECD’s BEPS project is an international mechanism. It’s exactly what you have described as being needed (and more than 80 non OECD countries were involved in its creation).

    And have a look at Trocaire’s Robin Hood Tax plan.

    In short, 65%, more research needed.

  8. bisted

    …still in Wales Dan? Banished for the duration of the election?…at least now you are a real West Brit.

    1. Dan Boyle

      Yes Bisted. I’ve been banished. I’m silent and am being hidden. It’s all part of an elaborate conspiracy where I apply for a job, they accept me and I accept the job. No one was supposed to work that out. Damn you and your amazing intellect.

        1. Dan Boyle

          The myth of Irish exceptionalism is the collective deceit that we’re different from the rest of the World.
          Haven’t seen any other queries.

          1. meadowlark

            Americans seem to think they live in “the land of the free”…

            Need I say more?

            (great comment classter)

      1. Same old same old

        Gas that someone finally recognised your talents. I mean with you being so qualified and all. Will that mean you will have less time for the writing now?

  9. Anne

    I was reading that the Irish government – i.e. you and me will be held liable if Apple are fined the 17 odd billion in back taxes. Imagine that. 17 billion. Fiscal space won’t be so spacious.

    1. scottser

      how on earth is the irish taxpayer liable for the profits of multinationals?
      oh, wait, sorry i forgot..

  10. Anne

    “Our reputation could be better improved if we were to contribute to an honest international debate on fair tax.”

    Like how they were interested in a debate about bond holders taking the hit on their gamble?
    They’re not interested in any debates.

    1. classter

      ‘an honest international debate on fair tax.”’

      Like the Uk’s non-dom provisions, or the hedge fund tax break they had for years or all the British crown dependancies which are tax havens.
      Or France giving an effective corporation tax rate lower than Ireland to large French firms.

      Or the fact that corporation tax is essentially a nonsense in a world of multinationals which sell non-tangible products in over 100 countries?

      1. Kieran NYC

        +1

        I’ve a feeling some countries could regret opening this can of worms. There’s a LOT of whataboutery to go around.

        It was laughable when US Congressmen were pointing at us last year while totally ignoring the state of Delaware.

  11. ollie

    Fair tax.
    1. Carbon tax, irrespective of ability to pay
    2. Reduced motor tax for expensive cars, increased motor tax for old cars. No consideration of CO2 produced during the manufacturing process.
    3. Tax rebate for electric cars, regardless of cost (€5,00 tax back on €155,000 BMW)

    Dan Boyle, expert on fair taxation whose party implemented the above taxation.

    1. classter

      1) A carbon tax makes no sense if you add allow for exemptions for those ‘unable’ to pay. The whole point is that it provides an incentive to produce carbon-efficient goods and services.

      2) The embodied CO2 impact is not as much as you think, especially since we recycle so much of the existing car. There are also other environmental impacts from cars other than Carbon – air pollution etc.

      3) So? Not all taxes are progressive in terms of income, sometimes they are trying to achieve other goals (stop smoking, reduce pollution & climate change) and easy to implement.

      1. ollie

        Classter:
        1. A carbon tax is a tax levied on the carbon content of fuels. A means of increasing the tax take without reducing the carbon emission.

        2. Diesel cars, which have the lowest car tax rates, produce more pollutants than petrol powered cars. So your argument re: air pollution is nonsense.

        Also, all cars are recycled at the end of their life therefore any CO2 impact should be calculated on the manufacturing of cars and NOT recycling. I’ll bet my 14 year old car is responsible for less carbon over the last 14 years, including manufacturing, than my neighbour’s 5 new cars.

        3. I am aware that not all taxes are progressive in terms of income, however giving someone who buys a 150k car a tax rebate of 5.5k is criminal, and I suspect this is an outcome that was not anticipated when the scheme was introduced as electric cars were not luxury items. In addition, less than 20% of electricity used in Ireland daily is from renewables, so we are giving 5k tax back to a motorist who still uses 80% fossil fuel to charge his car!

        1. classter

          ‘Also, all cars are recycled at the end of their life therefore any CO2 impact should be calculated on the manufacturing of cars and NOT recycling. I’ll bet my 14 year old car is responsible for less carbon over the last 14 years, including manufacturing, than my neighbour’s 5 new cars.’

          You’ll bet but carrying out a LifeCycle Analysis would suggest otherwise.

    2. Dan Boyle

      Carbon tax increased in scope and rate under this government. It’s linked to usage and provides a element of environmental pricing.
      Motor tax change saw a reduction in what was paid for a majority of motorists. Big car argument overblown
      Little take up of electric car grant. Was targeted at middle income earners to encourage the technology.
      In general in relation to fair taxation the budgets we helped shaped were judged by the ESRI as being equitable, in that those with most contributed most. None of the budgets of this government were equitable.
      I realise that known if this can convince you as you have were script to work off.

  12. ollie

    Dan, the take up of an unfair tax policy is not the issue.
    “Motor tax change saw a reduction in what was paid for a majority of motorists. ” This is an out and out lie.

    All of the points I made were correct and you haven’t refuted or defended them.

    I’m not sure what this means “I realise that known if this can convince you as you have were script to work off.”

    1. Dan Boyle

      One I don’t lie and the motor tax statement is a fact. Because you don’t agree with something doesn’t mean that it is untrue. Two – Why would I refute a carbon tax? I believe it is a necessary fiscal instrument. What I refute is your construction of it. Three – Same is true of the electric car grant.
      Spell check changed words in last sentence. Basically it doesn’t matter what I say you’ll disagree with it instinctively. Thinking doesn’t even come into it.

  13. Richard

    Has a bit of DeValera’s ‘Maidens at the cross roads’ about it. Ireland is not a suitable location for ‘making things’ to such a level as to replace the jobs that would be lost under DB’s proposal. We do not have the ability (or the scale) to move to a manufacturing based economy.

    Internationally traded services create high quality employment on a scale that manufacturing in Ireland just could not.

  14. Starina

    tax companies who do ephemeral things….sooooooo in other words, kill our IT sector? does Dan consider coding to be real or unreal?

    1. Dan Boyle

      I love how people here take from the general to the particular to tell me things I haven’t said. We need more manufacturing industry. We need a better balance between manufacturing and services. No argument being made that one should be at the expense of the other.

  15. timbot

    I don’t really get the case for favouring physical production. I work for a company that produces software, how is that less preferable than a company that produces widgets?

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