From top: Why Apple owes Ireland; Paul Murphy TD
Ireland has functioned as a tax haven for major corporations for decades and now the chickens are coming home to roost.
There should be no confusion.
Paul Murphy TD writes:
That’s the government response to the EU Commission ruling that Apple owes €13 billion plus interest in unpaid taxes to the Irish state – an amount that would come close to €19 billion.
It has to be presented as very complicated because the simple reality of it is too explosive.
James Connolly had it right over 100 years ago when he wrote:
“Governments in capitalist society are but committees of the rich to manage the affairs of the capitalist class.”
it’s supposed to operate subtly so the government preserves the illusion of acting in an imagined “national interest”.
With over €13 billion owed to the state by a corporation which has a cash pile of close to $200 billion that subtlety has gone out the window. There is a choice to try to claim that money to use it resolve the many devastating social crises people in this country face, or to fight tooth and nail to keep it on Apple’s balance sheet.
The government’s choice, backed up by Fianna Fáil, is clear – they’ll fight for Apple to keep it and they’ll spend yet more money doing so. But in making that choice they are in danger of exposing the reality that the establishment parties as representing the 1%.
That is why it has to be made very complicated. Here are some of the key reasons the government says “it’s complicated”:
1. “We cannot be responsible for taking the tax from other countries.” (Brian Hayes MEP on Sean O’Rourke 30 August 2016)
The situation is presented by the government as if Ireland somehow stumbled into being a tax haven par excellence in the European Union. This is scraping the barrel of disingenuity. Apple Sales International and Apple Operations Europe weren’t incorporated in Ireland by accident.
They were there because of a conscious policy of government, implemented by Revenue to allow corporations to funnel profits through Ireland paying effectively no tax.
In this case, two tax rulings were given by Revenue in 1991 and 2007 to Apple in order explicitly to allow Apple to count tens of billions of euros of profit on a yearly basis on the books of Apple Sales International and Apple Operations Europe and pay a tax rate as low as 0.0005%.
The government can’t have its cake and eat it.
The fact that these elements of Apple’s operations made huge profits and paid almost no tax seems to be undisputed by the government. Then they should accept that significant tax is owed and should be paid.
2. “The Commission wearing another hat… would require monies like this to be taken off the national debt” (Minister Noonan on News at One 30 August 2016)
This was an argument wheeled out yesterday and regurgitated by many journalists to try to cut across the predictable anger that the government would rather Apple have this money than spend it on homes for example.
When EU Commissioner Vestager appeared on RTE’s Drivetime later and flatly denied it – saying that the money could also be used for capital expenditure, Minister Paschal O’Donoghue had to admit that’s the case.
So now the government accepts, that even within the Fiscal Treaty austerity straitjacket, the money could be spent on capital expenditure, including housing.
3 Apple is going to appeal the Commission decision anyway
It’s Apple’s own business what it does to try to keep its cash mountain growing. The government is supposed to represent people in Ireland.A decision by the Irish government to “fight it in the European courts” (Noonan, RTE News at One 30 August 2016) will go down as this government’s bank guarantee moment.
It will be nauseating for millions of people that they will spend public money to try to allow Apple to get richer while two thousand children are in emergency homeless accommodation.
4. Other countries could have a claim on the money
Of course other countries could have a claim on unpaid tax by Apple. It is presented by the government as if there is now a pot of €13 billion which would have to be divided up between countries that would claim it. That’s not the case.
The €13 billion figure would increase if other countries were to take cases against Apple for unpaid taxes, because they mostly have higher rates of corporation tax than 12.5%.
Ireland is a key conduit in a global tax avoidance chain. The only winners from that are the big corporations and the lawyers and accountants who make a fortune from devising ways for their clients to avoid paying tax. The losers are the public in this country, in other developed countries, but particularly people in developing countries.
The UN Conference on Trade and Development published a study last year which found that developing countries lost about $100 billion a year in tax avoidance by major corporations. That is an issue of global injustice – and Ireland should stop being a country which facilitates the flood of wealth upwards to the 1%.
5. But what about all the multinational jobs?
This has become the equivalent of Helen Lovejoy’s “Won’t somebody please think of the children?” from ‘The Simpson’s.
The government is consciously engaging in scaremongering suggesting that all 187,000 jobs will go if one company, Apple, is forced to pay the over €13 billion in back taxes that are owed. They are preying on the fears of those who work in the multinationals and their families.
The fact that they can do so speaks volumes about the unstable economic system they are committed to. The over 5,000 people who work for Apple in Cork do real work – they create wealth and profits for Apple.
However, the vast majority of Apple’s ‘activity’ in Ireland has been nothing of the sort – it is simply a con to ensure that they don’t pay any tax.
We should reject the scaremongering which is designed to ensure that multinationals will continue to be able to not pay any tax, but also challenge the model which allows the government to use these threats.
Fintan O’Toole in today’s Irish Times is 100% accurate when he writes that the “reputational damage” that the government fears is actually ““damage to our well-earned reputation among corporations for facilitating tax avoidance on a global scale.”
Together with the ludicrous 26% growth rate which bears no relationship to the real economy or people’s lives, this ruling illustrates the fundamental unsustainability of the chosen developmental model of the political establishment in this country.
Hawking Ireland as a location with low or non-existent corporation tax, low data regulation and low wages has delivered GDP growth, but a deeply unequal society without any significant manufacturing base and dependent upon the whims of major corporations.
That model is now a failure and should be recognised as such. If we want a real and sustainable recovery, a break from the rule of corporations and the tax haven model is needed.
Instead of “committees of the rich”, we need a left government with socialist policies committed to sustainable development. That means forcing the corporations and rich to pay their taxes.
It also means using some of those resources to fund significant public investment, for example in green energy which could provide tens of thousands of quality jobs.
It means developing an industrial policy based on democratic public ownership of the key resources and sources of wealth in our economy and planning to meet people’s needs.
It’s not complicated. It’s simple.
Paul Murphy is a TD for the Anti Austerity Alliance. Follow Paul on Twitter: @paulmurphy/AAA