Government zealously protects the wealthy in Ireland’s Wild West tax haven
The deference to financial and corporate power that impelled Brian Cowen and Brian Lenihan to give the blanket guarantee to the financial institutions on September 30th, 2008, speaks again in the obsequious secret deals done with multinational companies on tax and in the fastidious avoidance of taxing high earners.
We now know that one of the largest multinational corporations operating here, Apple, pays a derisory 2 per cent in corporation tax and, according to a US congressional report, this is done by way of a deal with the Irish Government. Whatever the truth of that – more probably it was done by way of an unspoken understanding – Ireland now features among the “wild west” tax havens of our time. So much so that an ingenious tax scheme called the “Double Irish”, based on Irish tax regulatory policy, permits the wholesale avoidance of billions in tax revenue to US, UK, Irish and other coffers.
About the only promise this Government made before the last election by which it still stands is to refuse to raise the Irish corporation tax rate of 12.5 per cent. As it happens, the promise is meaningless.
According to the US Bureau of Economic Analysis, the effective corporation profits tax rate in Ireland is 4.2 per cent. The rate in France, by comparison, is 26.8 per cent (this is quoted in Corporation Tax: How Important is the 12.5% Corporate Tax Rate in Ireland? by Jim Stewart of TCD school of business).
Complicity of State
Now new information has emerged about tax devices and Ireland, courtesy of the Economic and Social Research Institute. In an article in the current quarterly review of the economy published last Thursday, John FitzGerald shows that there has been an influx over the last few years of company headquarters from abroad, notably Britain, and the effect of this has been to boost Ireland’s gross national product by about €7.4 billion.
This has seriously distorted the GNP measurement of the Irish economy’s performance, for these companies have no presence of any kind in Ireland and are of no value to the Irish economy. However, because our contribution to the EU is measured on our GNP performance, this means, according to John FitzGerald, that we are paying €100 million more than we should be paying to the EU annually.
Nobody, as far as I know, has made any issue of this but then, given the state of the financial crisis, what is €100 million?
Enda Kenny is off to another EU summit tomorrow and in a few weeks’ time he will be representing the EU at the G8 meeting in Fermanagh. For both these meetings the issue of tax havens is on the agenda and Ireland probably will feature in the deliberations. What will Enda Kenny say about the complicity of the Irish State in these tax structures?