EU Commissioner Margrethe Vestager will not be expecting any Christmas cards from the Irish finance minister Michael Noonan this year as her ruling on software giant Apple could topple a very fragile government.
Taking on the killer whale of American corporations, Ms Vestager seemed heaven sent to uber liberal lefties and smoked salmon socialists who were salivating at the prospect of Apple bosses having to shell out some £11bn from their well-filled coffers.
Let’s be clear from the start - £11billion is not to be sniffed at, as it’s the equivalent of the total spend on the Irish healthcare system for a year. Secondly, in case the misery Monas of the left think otherwise, I agree that too many multi-national businesses get away with blue murder when it comes to taxation and it’s the small business person who ends up paying until they bleed.
But two things need separated out here. One is the moral issue of whether Apple pays their fair share of tax across their international markets. That is simply answered. No they don’t. The second part is more complicated and it revolves around whether the European Commission has over-reached its locus by attempting to unduly influence the taxation polices of a member state, when taxation remains a sovereign issue. At face value it would seem that Ms Vestager has been a little too enthusiastic and her predecessor, former Commissioner Neelie Kroes thinks so too. Ms Kroes is the lady who took on the mobile phone giants and rid us of those awful roaming charges, so she’s got credibility on taking on corporates and winning. A fundamental issue in all tax law is that it can’t be applied retrospectively and Ms Kroes believes that this is where her successor has lost the plot.
The history of the Commission when it comes to delivering penalties/judgments is that it tends to hit the smaller countries harder for breaches than the larger member states. In Apple’s case there is also a degree of anti-American corporatism from the EU.
Many people, including some surprising voices from within the financial sectors, have said that Apple should take their medicine and cough up. Some have gone further and said that the Irish government were equally guilty of building an economy based on fuelling this type of perceived tax avoidance. Ironically when the Irish and British taxpayers had to dig deep in terms of shoring up the banks, few if any of these voices from the financial sector were heard criticising that move.
The hurlers in the ditch are bursting with moral indignation at Apple plc and in doing so are putting Ireland Inc in economic danger. Don’t get me wrong – I am not saying let’s do a bring and buy for the poor old Apple fat-cats but this ruling could end up being a huge own goal for the EU.
Firstly Apple employs some 6,000 people in Ireland and a further 3,000 jobs are supported by the company’s presence. That’s tens of thousands of people who are dependent on Apple. And that does not include the shops, cafes and other businesses which also depend on the spending power of those employed. Furthermore Apple has been in Ireland for the long haul. Steve Jobs opened the first operations in 1980 with 700 employees.
Leaving aside the economic crash, which was caused by international conditions, public sector largesse by successive governments and a reckless banking sector, Ireland, despite its size, has become an international powerhouse in terms of attracting foreign direct investment (FDI) and particularly in the financial services, data, software, pharma, life sciences and electronic sectors. Ireland’s relatively short recovery from the economic crash is in no small part due to its ability to attract international investment and create high value jobs. Today nearly 200,000 jobs are created by multi-national firms in Ireland and 11 per cent of all US overseas investment is in Ireland. Along with Apple, Ireland is also home to Google, Twitter and Facebook.
It’s the sole right of the Irish government to set its own economic and taxation polices. The European Commission needs to be told to back off. Ireland shouldered nearly 41 per cent of the entire EU banking crisis – only topped in contributions per capita by the mighty Germany. A one off windfall - even one of £11bn – is simply too big a risk to an economic strategy that has served Ireland well. To paraphrase Parnell - ‘No commissioner has the right to fix the boundary to the march of a nation’- not even an EU one.
