There’s a wonderful scene, for those of you who appreciate Star Wars, buried in the middle of The Empire Strikes Back. Lando Calrissian, the gambler and crook who has been operating the Cloud City Mining operation for years with the tolerance of the Empire, makes a deal with Darth Vader: He will hand over his friends, the rebels, to the Empire’s care. In return, Vader will look the other way as Calrissian continues to make a little profit. Unfortunately, and predictably, the Empire does not abide perfectly by the terms of the arrangement, and Calrissian protests to Vader, whose response is simply “I am altering the deal. Pray I don’t alter it any further.”
And that, you see, is what happens when you do a deal with the devil, or a misunderstood fellow in a fetching suit of armour.
It’s a useful analogy, that, for the position that the Irish state finds itself in with regard to global tax arrangements.
Ireland, you might recall, rather unwisely signed a global tax agreement last year, in one of those moments where the Irish establishment turns on a sixpence and insists that the thing that was vital to our national interests for decades is suddenly, and without warning, no longer really vital at all. The 12.5% corporation tax rate, it turned out, could not only be tossed aside with no consequence (after years of insisting that it was the red line beyond which no Irish Government would ever go) but, in the manner of our times, ditching it was suddenly not so much a policy decision as a moral crusade. It was the right, moral, upstanding, global citizen thing to do, and woe to those who might question the wisdom of the U-turn. As is tradition here, the U-Turn was not only performed by Government, but by every opposition party, and media organ, and talking head, in unison. Those of us who had gladly supported the establishment position for years were, as is now a national tradition, suddenly presented as fringe lunatics with dangerous ideas about sovereignty and no understanding at all of the bigger picture.
Alas for Ireland, the United States plays the role of Darth Vader in this story, as outlined in the Irish Times yesterday.
Minister for Finance Paschal Donohoe has warned of the risk posed to the State if an OECD-brokered deal on multinational tax fails to get across the line. A global deal to ensure big companies pay a minimum tax rate of 15 per cent was agreed under the auspices of the Organisation for Economic Co-operation and Development (OECD) last year. However, it has run into difficulties since then.
EU finance ministers are unable to adopt a draft directive to implement the OECD’s pillar two plan because of objections from Hungary, while proposed US legislation waters down the original agreement amid growing scepticism from Republicans. The OECD’s tax chief Pascal Saint-Amans, who co-ordinated efforts to reach agreement for a minimum rate, has meanwhile announced his departure from the Paris-based organisation.
There are a few lessons here, for those who wish to see them. First, look at little old Hungary: Holding up a “vital” international tax deal because they feel the deal is not in their national interest. This is, incidentally, the very thing that the great and the good in Ireland tell us with fervent frequency that we could never do, and would be most unwise to attempt. We’re only little, you see. Not like Hungary, a country of less than twice our population. That country has no problem asserting it’s national interest, you’ll note. Though I do fear the prospect of Hungarian Ministers getting big EU jobs on retirement may have receded a little as a consequence.
Second, the Americans, God Bless them.
It’s always been astonishing to this writer the extent to which everyone who is anyone in Dublin considers themselves a form of expert on American politics, and yet, is blindly fooled any time a Democrat makes them a promise. Joe Biden promised that he would get this deal passed, but he made that promise without the congressional majority to pass it. The Irish political establishment, which will sit up all night this November rooting for Democrats in the mid-term elections, can’t count. Some of us warned them at the time.
There’s a third point here, too: Look at the last line in the quoted extract above. This deal is under threat partially because of the departure of one official, Pascal Saint-Amans, from the OECD. Why? It could hardly be, could it, that one unelected official at the OECD had the power to sway global governments into a tax deal that he favoured? What does that say about the intellectual capacity of our elected rulers, if an unelected bureaucrat in Paris is the person who convinces them to change our pillar tax policy?
This is, and ever was, goodboyism. The politics of getting a pat on the head, and making the pat on the head a virtue. We entered this deal for very few reasons other than that our leaders could bask in praise from foreign politicians and bureaucrats, and present that praise to the public as evidence of what good rulers they are. It is how this state has related to the EU, the UN, and various other global institutions for decades. Not as vehicles for the national interest, but as vehicles for securing a spot of national belly-scratching.
But, in the words of Darth Vader, they are now altering the deal. Paschal Donohoe must pray they do not alter it further.
What was it Leo Varadkar said last month again? Oh yes: That Paschal is very respected in the Euro Group of Finance Ministers. I bet he is.
I bet he is.