Ireland Inc’s Comical Ali

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US treasury secretary Janet Yellen with Minister for Finance and Eurogroup president Paschal Donohoe at the G7 finance ministers meeting in London last week; Michael McNamara TD

Having returned from having smiling photos taken with the world’s economic leaders, Paschal Donohoe announced he was going to fight them on the beaches, on the landing grounds, etc.

Boris couldn’t do it better.

There was much talk in the media this weekend about a €2bn reduction in our tax take and that this has been foreseen for some time. All of this is true. The bigger problem, however, will be the impact on our GDP figure which, for several years has been inflated by profits channeled through Ireland for corporation tax reasons. Our borrowing (especially over the past 12 months) only look sustainable relative to that inflated GDP.

Once that deflates, the situation looks a lot less sustainable than Paschal merrily portrays. The reality is that we have the highest borrowings per capita in the EU and the highest rise in borrowing per capita over the past 12 months.

As all of this was happening, Joseph E. Stiglitz, Nobel Prize-winning economist, was accusing the government of “stealing tax revenue from its neighbours – from other members of the EU,” at an event organised by the German Friedrich Ebert Stiftung think tank to look at the transformations required to deal with the consequences of the Covid-19 pandemic.

Coming just three weeks after Paul Krugman, also a recipient of the Nobel Prize in Economics, wrote “Biden, Yellen and the War on Leprechauns” in the New York Times, it was clear that there was a concerted push against Ireland’s corporate tax regime from in high in the USA. Stieglitz, Krugman and the New York Times would all be considered to be broadly sympathetic to the Democratic Party that currently controls the White House, Senate and House of Representatives.

Meanwhile, the European Commission was calling for tax reforms as part of Ireland’s national recovery plan and Ireland was embarrassingly reduced to opposing basic tax transparency measures in the EU earlier this year, proposals designed to make sure that multinational corporations pay their fair share of taxes in all States, in developing as well as developed ones.

Ireland opposes them on the rather narrow legalistic grounds that the rules are being adopted on the wrong legal basis, the morality of the proposals being very hard to argue against – never a great indicator of the longer term viability of a state’s position.

All of this leaves the central strategy for the economic development of this State since the dark mid-80s – one that has served us well over many years but has become unsustainable during Paschal’s tenure as Finance Minister – in ruins.

Instead of developing an alternative in response, he merrily continued to assure us it was all OK. Just like Comical Ali as the detonations were getting closer, the blithe assurances remain the same.

When we first started to attract Foreign Direct Investment on a large scale in the 80s, our Government also used to speak of the attractiveness of our well-educated, young, English-speaking population.

Now, most multinationals, particularly in the tech sector, hire in from abroad. In the past year, many of those workers have been working from their homes all over the world but for tax reasons they, the tech corporations and Irish Revenue Commissioners all pretend they’re still in the empty office and apartment blocks in the Docklands.

Ireland Inc has effectively given up on presenting any basis for our economic development other than our tax code and its selective implementation.

Perhaps there was truth in Paul Krugman’s article: that “the way to create jobs is to create jobs, mainly through public investment, rather than by chasing unicorns and leprechauns”?

For our part, the biggest investment in the infrastructure that is a prerequisite for job creation is the National Broadband Plan. During the last general election, it was routinely compared to the post-War rural electrification scheme such was the scope of its ambition and the impact it would have on rural communities and the ability to build an economic future to sustain them.

Water supply limitations is the big obstacle to further economic expansion in our Capital, we’re told, with Victorian pipes leaking half of their precious potable water into the ground. Yet, the opportunity to replace those pipes posed by the hiatus of activity on the streets under which those pipes flow was spurned.

Just 4,000 homes were reached by the “national” broadband plan in the first half of this year, out of target of 115,000 for 2021.

But we’re still getting the Comical Ali assurances.

Michael McNamara is an independent TD for Clare.

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17 thoughts on “Ireland Inc’s Comical Ali

  1. Johnny

    No ambassador,never mind a NI special envoy,is Uncle Joe snubbing Martin?

    Great piece,Ireland’s demographics are its great asset it’s leaders it’s greatest liability along with its tenured professors.

    This is junk,absolute total BS,flooding the zone with nonsense…third division stuff,did FG prepare his remarks ?

    Huh…a wha…irish company …in where…headquartered where….I mean of all the analogies available,France like …how would that even occur to him….irelands best and brightest,what brain drain Stephen…this is absolute rubbish and propaganda.

    “What it means is that a US multinational located in Ireland which pays an effective rate of 10% will be forced to pay another 5% back to the United States. It equalises the rates between different counties. Similarly, an Irish multinational based in France which pays an effective tax rate of 5% will pay another 10% on remittances sent back to Ireland. It’s country by country reporting.‘

    1. Johnny

      https://www.rte.ie/brainstorm/2021/0608/1226824-ireland-g7-15-percent-corporate-tax-rate-2-billion-loss/

      -However, Minister for Finance Paschal Donohoe, has said that the deal could see Ireland lose over €2b a year in corporation tax revenue. Prof Stephen Kinsella, Associate Professor of Economics at the University of Limerick and chief economics writer with The Currency, gave his analysis on the move to RTÉ Radio One’s This Week.-

      An irish company headquartered in France,what a load old bolloc….

      Louis Vuitton – Paris

      Airbus, Blagnac

      Renault – Boulogne Billancourt

      Peugeot – Paris

      Carrefour – Boulogne Billancourt

      L’Oréal – Clichy

      Fnac – Ivry-sur-Seine

      Bandai Namco – Lyon (European headquarters)

      Total – Courbevoie

      Orange – Paris

      And also a few banks like AXA, Crédit Agricole, Société Générale and BNP Paribas…

      https://en.wikipedia.org/wiki/Category:Multinational_companies_headquartered_in_France

  2. eoin

    Stiglitz and Yellen are mouthpieces for the banking system. They just deliver messages on behalf of their masters. I’ve even heard that Yellen is a moron from people who have dealt with her in the past. She stated last week that inflation is a good thing. Prices going up is a good thing? For whom? Pretty moronic. She should be retired along with most of the high level officials in Washington.

    1. Junkface

      Yep. Janet Yellen is a former chair of the Federal Reserve and only 2 years ago was paid $250,000 or so for after dinner speaking by the Wall street big banks. That’s who she really represents, so whatever they are deciding on this issue, you can be sure the banking class win again. That’s Biden’s cabinet in a nutshell, neo-liberal Wall street reps.

  3. Mr. T

    Why must the role of opposition always be played by one man?

    Almost half the Dail, and yet nobody speaks out on this stuff but Micky McNamara. Fair play to him

  4. Zaccone

    Great piece.

    I work for a large American tech firm. Our staff are 80% non-Irish. I have friends working for other large tech firms that all say the exact same. A key requirement to work for most of the big tech firms in Ireland these days is multiple fluent languages, which the vast majority of Irish graduates just don’t have.

    Its also getting increasingly difficult every year to attract these non-Irish young people to move to Ireland given our bonkers housing market. And having the strictest lockdown in Europe over the last 15 months on top now definitely isn’t helping, the “craic” of Dublin was the one big selling point that helps to counteract the high cost of living.

    The idea that MNC firms are moving here for our “young educated population” is nonsense PR fluff. They’re here for the tax breaks. Its not going to be pretty when we lose that competitive advantage.

    1. Micko

      “ young educated population”

      But but but… our education system is the best in Europe!

      Sure it is…

      The amount of people I’ve heard in my life parroting this statement or similar.

      It’s total rubbish.

      1. Darce

        agreed. sure our top university (trinity) isn’t even in the top 100 universities in the world.

    2. JEH

      Totally agree with this comment and the original piece by Michael. I work in a tech adjacent field at Grand Canal Dock and have a ton of friends at the big tech companies and start ups. The overwhelming majority are non-Irish. The idea that companies are based in Ireland because of a well-educated English speaking population has been a myth for a long time. And for the last several years it’s been getting harder to bring in people from abroad because of the housing situation. I know of Europeans who turned down jobs with Google and Facebook in Ireland once they found out about the cost of living here, which pre-dates any compounding issues from covid.

      The original piece by Michael, while accurate, isn’t even really saying anything new. The critique he offers does still need to be called out as it doesn’t seem to be common knowledge yet, but the problems he cites are structural and have been present for a very long time. When the tax breaks go, so too will the MNC. Why do you think the Irish government fought the ECJ so hard over the Apple tax issue? When before have you ever heard a government fight against taxes that it has been told it is owed?

      The current economy in Dublin is built on tourism, foreign student fees and expenses (soft FDI in a way), and propped up by MNC whose employees earn well above the median income. That’s tax revenue that cannot easily be replaced if any of these tech companies were to start shedding staff.

      The new Celtic Tiger delusion is going to end in disaster as well leaving anyone who’s still here with a lot of debt and unsustainable living conditions. The current value of housing isn’t realistic in the long term and many young people with mortgages are going to be under water. The millennials are going to get screwed again after having experienced their second “once in a lifetime” recession.

      There won’t be nearly enough chairs left with the music stops.

      1. goldenbrown

        JEH I know of some who have already judged the music to have stopped and already made their arrangements (or are attempting it as we speak)

        not so much shedding as retasking + relocation

        these numbers are fairly hidden from view…I’m certain the Govt are aware but not wanting to talk about it too much…..Varadkers outburst about offices and August had an odd bang off of it

        what are you seeing on the ground yourself today exactly?

        1. Darren

          There is also a line of thinking that the loss of tax thrifty business and high income short term citizenship might deliver a more equitable route to home rental and social development across a wider selection of society.

          There are no shortage of commenters on bs who have not failed to notice the class differences that best describe dublins population so it is not as if it is escaping anyone’s attention.

          There has been an upside down approach to delivering meaningful opportunities like a place to live for so long that it’s not anyone’s fault any more. It’s just the way it is. Fair points from those who work within the tech industry and surely their talents will be wanted elsewhere if it came to that.. and of course it is each person’s decision but it is disappointing that poor political leadership has deterred, if not coloured the picture of life in ireland.

          The fear is real because it has been used to pump up prices and drive debt normalisation and private profits almost as a way of life.. how could it ever be doubted as to its hold over our collective psyche. We’re backing better .. come on now it’s time to realy go for it..

          Whatever about our unwillingness to learn languages .. We are not stupid but we have had the frightners put on us as a generation .. no question

  5. Daniel

    Great piece by Michael.

    I don’t support everything he says on Covid, but i believe he is right in questioning & challenging it.

    I am hearing more anecdotal stories of larger international businesses telling staff that the current plan is that only a select few will be returning to the office with the unrequired office space to be rented out or returned. it wont be long till there is a glut of office space on the market.

    So there is combination of events coming down the tracks in the near future. And as a country we are definitely going somewhere we haven’t before and it would be stupid to just stick our heads in the sand (or up our arses) and think everything is rosy and great (the perspective for the lucky few (myself included)) and will stay that way forever more.
    We need more politicians (like Michael and a small number of others) to at least attempt to know what is coming and prepare us/ the country for it.

    There is nothing more insulting than being told that all is grand and not to be worrying or rocking the boat by the likes of Paschal when it is fairly clear that change is coming.

    Would be interested in more from Michael if he has the time to send in contributions.

  6. perricrisptayto

    Michael McNamara is worth his weight in gold.
    This country is run by a bunch of money grabbing baxtards who’s sole purpose in life is to enrich themselves for minimum effort regardless of the affect it has on the country as a whole. No shame is their collective reasoning.

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