EU

An Apple A Day: The fallout of the Ireland-Apple Tax Ruling

 

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Leinster House, seat of the Irish Parliament, the Dail

 Eoghan Hughes

Amongst all the sound and fury in the aftermath of the European Commission’s decision that Ireland must collect a minimum of 13bn in tax from tech giant Apple, a fury that has included accusations of tax evasion, a tense moment between coalition partners and endless debates over the benefits of the Irish “Sweetheart System”, most observers seem to have overlooked a key piece of dialogue from this drama. The lines were delivered by none other than Irish Taoiseach (Prime Minister) Enda Kenny, and they were part of his response to questions regarding the Irish executive’s decision to appeal the Commission’s ruling. Kenny said:

“…I make no apology about our decision to appeal this because it’s about Ireland. It’s about our people, it’s about us as a sovereign nation actually setting out what are appropriate policies to devise job opportunities and employment careers for our people.”

This statement marks something of a sea change in Irish politics. Far from breaking down under international pressure, Kenny seemed unrepentant before a hostile media response. It is a rare stance to take for a state that rarely raises its voice in class. Long accused by some states, including a SYRIZA led Greece, of failing to fight the imposition of austerity as a condition for an EU bailout during the height of the financial crisis, the Republic of Ireland has cultivated an image of Europe’s “good performer”, as Christine Lagarde of the IMF has put it. This has been bolstered by a stupendous economic recovery, unmatched by any in the Eurozone, and by consistent growth. When Yanis Varoufakis, in his brief stint as Greek Finance Minister, went to war with the EU establishment over austerity, the Irish government kept mum. Where Portugal and Spain failed to find a political consensus in the post-austerity fragmented political landscape, Ireland’s largest party, Fine Gael, managed to cobble together an uneasy alliance to allow their continued governance.

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Irish Taoiseach, Enda Kenny

The decision of the competition commissioner Margrethe Vestager to pursue the tax ruling, however, has sparked something that has been quite alien to Ireland in the past; it has brought out the Eurosceptic. If you are not convinced, read another choice quote by Kenny:

“This is about the right to small nations. I’m not sure whether the European Commission want to ingratiate themselves with countries more powerful than ours. But this is a small country, and the first meeting I attended after being elected in 2011 was [about increasing] our tax rate.”

To hear an Irish leader speak of the “right to small nations” is, to an Irish citizen, to be transported to another age altogether, when the island of Ireland as a whole was a member of the British Commonwealth. Now, not yet a hundred years since the dissolution of the union of Great Britain and Ireland, the same rhetoric has for the first time been used by a person of power in Ireland against Ireland’s greatest benefactor: the European Union.

Understanding the significance of this will take a little background. For those of you who have not been keeping abreast of the Irish Apple drama, it can be summarized easily enough. Apple has used the Irish county Cork as the base of its European operations for nearly four decades, taken advantage of a lucrative Irish corporation tax of 12.5 percent. The Commission has found that, rather than paying this rather paltry sum, Apple has been afforded a special arrangement involving some complex constructions which allowed the company to pay next to nothing in taxes- which has been referred to as a “sweetheart” deal – by successive Irish governments. Although this deal is set to expire in 2021 in order for Ireland to be compliant with EU competition law, the Commission has decided that the Republic of Ireland was breaching EU law in its refusal to collect the full scale of Apple’s taxes on all of its European operations, and has demanded that the Irish government collect between 13bn and 19bn in back taxes from the American company.

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Tim Cook, Apple CEO, at Trinity College Dublin

The Irish government has responded negatively and vowed to appeal this decision, citing the potential loss of 5,000 Irish jobs and the possible knock-on effect the decision might have on Ireland’s financial recovery. Apple has stated that it has not broken any laws, a sentiment broadly backed by the Irish government. However, other commenters, such as economist and Nobel laureate Joseph Stiglitz have dismiss this argument as “balderdash”. At the same time, a few Irish politicians say they would welcome the cash influx to invest in Irish society. Irish Finance Minister Michael Noonan, however, claims that the sudden windfall of 13bn to the Irish budget would have to be used in full to pay back Irish debt, an argument that is being vehemently denied by Commission spokespersons.

All these dissenting voices lead to a complicated international incident, rife with tension and accusations. The only consensus to be found, it seems, is among the Irish population; the decision by the government to appeal this decision is one of the least divisive issues in Irish politics today, as in a recent survey, 62 percent of Irish people have said they support the government’s decision. This perhaps appears to be less than shocking in the current European climate which has seen the beginning of a Brexit, and the rise of Eurosceptic parties across Europe. However, when you put it in the context of another recent poll, in which respondents were asked whether Ireland, given a Brexit like vote, should remain in the EU, things seem somewhat different. The poll by Ignite Research found that 76 percent of Irish adults would vote to remain in the EU. This poll was not conducted in the distant past during the first flush of Euro money into the Republic, but in June of this year, after nearly a decade of austerity.

In this context, the government’s talk of “sovereignty” for small nations seems premature and out of tune with Ireland’s relatively positive relationship with the EU. Indeed, the Irish have many reasons to view the EU positively, as access to the single market and stability funds has allowed the young Republic to make investments, build roads and establish an international reputation in business. It could seem like the comments by the government and the recent poll are a fluke: an issue-based response to a current crisis. This is only the comforting reading of events, however, which conveniently forgets the fledging movement that was UKIP in the UK, and forgets that a snow ball rolling down a hill gains mass.

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EU Commission HQ in Brussels

Irish Euroscepticism is not unique, but it is new, and may even be nipped in the bud. The Brexit referendum has shown that public opinion in European nations is volatile, and the EU does not need a big toothache from little Ireland. The fear of a knock-on effect from the Brexit and a disintegration of the EU is by no means an inevitability. Ireland, along with many other countries, do indeed gain from their membership of what will remain – even when the Brexit negotiations have concluded – the world’s largest trading bloc, and this in itself can be enough to keep the project moving forward. However, it might take the Commission developing a different political sensibility.

This is not to say that Apple should not pay its taxes. By all rights it should. What it means is that a stronger Europe might be better achieved quietly. Loud pronunciations and condemnations from on high can spark a fire in a population. The Apple ruling, no matter if it was legally correct or not, came at a time when the rhetoric of sovereignty is echoing across Europe, where smaller nations are clinging to their rights under subsidiarity. The decision here, to rule against a law already destined for the rubbish bin strikes many as high-handed and has definitely been taken as politically motivated. At a time when the Commission has failed to deal with, for instance, the flagrant disregard for environmental law shown by the German car manufacturer Volkswagen, Kenny’s reference to larger countries highlights a keen suspicion that the Commission serves the interests of the EU’s larger, more populous states.

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Irish and EU flags hanging in Dublin

 

To fight off such accusations the Commission is forced to either launch an assault on the various corruptions afflicting every EU state, or to take a more practical approach, finding compromises rather than delivering rulings. Issues such as the Apple “sweetheart” deal and the Volkswagen emission scandal must be dealt with for the sake of all European citizens, but perhaps, in a time when Europe hangs in the balance, a quietly achieved consensus is better than a trumpeted success.

Click here for more by Eoghan Hughes.

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Click for more on contemporary Europe, read Sabine Volk’s article on Eurocentric right-wing rhetoric.

 

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