Credit: Houses of the Oireachtas

The Great Corporate Tax Sell Out

As ever, in Ireland, a great decision has been arrived at, and the RTE News last night could not find a single negative thing to say about it. “The writing was on the wall”, announced one contributor. “Good for Ireland”, said another. For a moment, you could imagine what it might have felt like to listen to German radio, in the aftermath of the battle of Stalingrad. A strategic retreat, indeed.

The facts are these, and they are simple: Ireland is, literally, the only country in the whole world where anybody of any influence is saying that the tax deal agreed to yesterday is good for Ireland. No other country, not one, not any, thinks that.

Indeed, the whole point of the tax deal, from the point of view of every other country, is that it should be bad for Ireland. That is the point. That is, as your teacher used to say, the objective of the exercise.

This all stems from a simple fact: Companies were moving to Ireland because our Corporate Tax rates were lower than competing countries. This made competing countries angry, even though those countries always had the option to lower their own rates.

Instead of doing so, they conceived a plan: An international treaty which would compel Ireland to raise its tax rate and become less competitive. That was the point.

Ireland has agreed to this. It has agreed, says the Government, because there was no other option. Leo Varadkar sort of let the cat out of the bag on that one last night: “people would have called us a tax haven”, he said.

Well, so what? We were a tax haven, for years, and it worked.

As ever in Ireland, a healthy dollop of bullshit has been dispensed to the public, to help the medicine go down. “We would have faced consequences”, people say. You will note, if you are a person of moderate intelligence, that these “consequences” are never specified.

Indeed, it is interesting that other countries went to the trouble of negotiating a treaty on this matter at all. After all, the French, Germans, and Americans have been complaining about the Irish tax rate for nigh on thirty years. If they had those “consequences” in their back pockets the whole time, they could simply have used them, and saved everybody time and trouble. Again, a person of moderate intelligence might ask that question.

The consequences, dear reader, did not exist. They still do not exist.

Indeed, the reason they could not exist is that the companies that the OECD wants to target are much too big to be targeted by any one country, or group of countries. That was part of the problem that this deal is intended to solve: They could not tax Facebook, or Google, or Intel, and compel them out of Ireland. The only way they could do it was to convince Ireland to do it for them.

So, what were the consequences? Sanctions? Hardly – there is no mechanism to impose them, bar the United Nations. If anybody seriously thinks that was an option, they might ask why such sanctions are not being proposed on the British Virgin Islands. No, the “consequences” were simply that our “diplomatic reputation” might take a battering. And even that is, at the very best, arguable.

Perhaps then it is they mythical common corporate tax base? This is the idea that if Ireland did not comply, then Germany and France might just start charging companies on profits made in their countries, depriving Ireland of tax revenue. This is an idea that has been discussed for thirty years, and never implemented. It has never been implemented because it is a terrible, unworkable, idea, dreamed up by professors in a laboratory. How much profit does Google make in Germany? Who do they send the bill to? What do they do if Google does not comply? Do they…. shut off Google in Germany?

Perhaps it might be easier with companies manufacturing tangible components, like, say, INTEL. But again, how do you calculate profit on Intel’s German sales specifically? How do you collect the tax from them, when they are legally headquartered outside of Germany? This idea was never workable. If it was workable, it would have been implemented two decades ago.

It’s important when you write for a living to try and put things in perspective, and not to use language that is very excitable. But it is also important to write things plainly, and factually. So, any honest writer must write here that this deal makes liars of Fianna Fáil, and Fine Gael, and constitutes a blatant betrayal of the voters who elected them. Both parties promised, at the last election, not two years ago, to “protect” Ireland’s 12.5% rate. They did not even try.

RTE, and the Irish Times, and the Irish Independent, and the Examiner, and the Journal, will all now do their patriotic duty, and put on the Green Jersey. On this issue, the airwaves will be saturated with platitudes. “Inevitable”. “A Good Deal”. “Supported by the American Chamber”. “Experts Agree”.

All of those things you will hear. All of them will be, to some extent, bullshit.

Yesterday’s deal was not a victory for Ireland. It was a crushing, epoch-defining surrender. And it will go much beyond just the corporate tax rate. We may as well not be independent at all, because, after all, what happens when there might be “consequences” on any other issue? We have now agreed the principle that the “international community” decides what we can, and cannot do, on any sovereign issue. And having won this victory, you can be sure those who, like the colonialists of old, wish to shape the whole world in their image, will not stop.

If the Government had any decency, it would resign in disgrace.

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