Irish Disgrace over Apple Tax Scam
by Finian Cunningham - Sputnik
September 9, 2016
It’s not just the European Commission that thinks the Irish government is indulging US tech giant Apple with illegal tax breaks.
Many ordinary, wage-poor Irish workers, unemployed youth, neglected hospital patients and impoverished pensioners are also infuriated by what they see as the Dublin government’s betrayal of their needs in order to suck up to the world’s richest corporation. The issue here is not merely an Irish domestic affair. It is about how servile governments choose to pander to capital and foreign investors while their own people are shafted.
After three years of investigation, the EC – the EU’s executive branch – ruled last week that successive Irish governments had given the American multinational firm “unfair and illegal state aid” by grossly undertaxing it to the tune of €13 billion ($14.5 billion).
The EC concluded that Apple’s international sales subsidiary based in the Republic of Ireland was afforded an effective corporate tax rate of less than 1 per cent. Considering that rates in Germany and France are over 30 per cent the Irish fiscal take is a pathetic nibble, not a fair bite into the profits of a company that globally makes over $50 billion a year. But, incredibly, the Irish government has made the bizarre appeal that it doesn’t want the money back.
Dublin claims that Brussels is compromising Irish sovereignty by interfering in its tax affairs. Irish opposition parties do not agree with the government. The leftwing Sinn Fein party points out that Irish citizens have borne the brunt of economic austerity for years since the financial crash of 2008, and that, as a matter of basic justice, the people should avail of the huge tax arrears which successive governments have indulged foreign capital with.
Putting Apple’s tax dues into perspective illustrates the importance of the sums involved. The €13bn would cover a full year of spending on public healthcare by the Irish state. This is at a time when thousands of Irish people are being denied medical treatment because the government claims there is no money in state coffers. Up to now, Irish governments have claimed that their low corporate tax policies over the past 25 years created a roaring economy driven by foreign companies setting up shop in Ireland. This gave rise to the phenomenon of the so-called “Celtic Tiger” in emulation of the East Asian economic tigers of South Korea, Taiwan and Singapore. The Irish corporate tax rate was nominally set at 12.5 per cent, more than half the official rate elsewhere in Europe and in the US. And, of course, American multinationals like Apple, Microsoft, Google and Facebook set up in Ireland to make enormous savings. Certainly in the case of Apple, the international sales subsidiary has all the appearances of a classic tax avoidance scam.
The company clears its global business revenues through its puny Irish office, thus avoiding paying taxes in countries where it has points of sale. The EU investigation found that the Irish government was not even applying its nominally low rate of 12.5 per cent on Apple. The effective rate was less than 1 per cent, allowing the tech giant to amass record worldwide profits.
Apple chief executive Tim Cook called the EC ruling “maddening” and claimed that his company had done nothing wrong. “Apple has always tried to do the right thing,” he maintains. Well, if that’s so, then why has his firm relocated much of its production facilities out of its US home country to exploit cheap labor in China? Is that what Cook calls “doing the right thing”?
Irish Prime Minister Enda Kenny, of the rightwing, pro-business Fine Gael party, may huff and puff about the “sovereign rights” of his nation. What is so sovereign and right about allowing foreign investors to trample all over Irish workers and deprive the Irish nation of its due taxes?
The European Commission has certainly got a bad rap in recent years from EU citizens fed up with relentless economic austerity. It is partly this populist backlash across Europe that is now obliging the Brussels administration to crack down on corporate tax dodging. EC President Jean Claude Juncker is making something of a crusade to stamp out tax loopholes and to claw back money for the benefit of long-suffering EU citizens. The EU leadership knows that if it doesn’t begin to act in a more democratic way, the forces of disintegration of the 28-member bloc may become unstoppable, as the Brexit vote earlier this year tends to show. Thus, the EU is pushing for greater tax justice out of an instinct for survival in the face of growing popular discontent.
This inevitably is vexing US corporations like Apple who have long played off EU member states against another to extract favors like rock-bottom tax rates. The move is also causing friction between the EU and US government. Washington has angrily denounced the ruling on Apple to pay back €13bn in taxes. The US claims the EU is acting unlawfully as an international tax authority. More likely, the US wants to get a share of Apple’s profits by declaring, sometime in the future, a partial tax amnesty so that the company will bring back a portion of its astronomical cash pile. Surely though, the question is: governments should work together to ensure a level business field so that multinational companies like Apple are not allowed to exploit national differences?
The case of Ireland is a particular disgrace. For decades, Irish governments have received billions of euro in EU development aid for building roads and other infrastructure. Yet, these same Irish governments have colluded with foreign corporations to cheat Europe and the Irish people out of billions of fiscal proceeds. For the Irish political class, the prestige of having top flight companies on their territory inflates their vanity and for a while the strategy may have seemed plausible. Soaring corporate profits artificially boosted headline growth figures of gross national product. But in the end, it is all a scam, for which the Irish people are paying bitterly.
The supreme irony is that this year marks the 100th anniversary of the Easter Rising – the insurrection in 1916 that heralded Ireland’s freedom from foreign domination under the British empire. James Connolly and the other leaders of the Rising proclaimed that henceforth Ireland’s national wealth would be prerogative of the Irish people. A hundred years later, the crumby, unpopular politicians who sit in government offices in Dublin evidently believe the opposite: That the wealth of Ireland belongs to foreign capital.
If we can learn one thing it is that the era of globalization and corporate dominance has to end. Otherwise, it is a futile race to the bottom whereby nations are held hostage to predation.
Democracy means nothing if the people do not have democratic control over economic policies. That the Irish government claims to be acting as “a guarantor of sovereignty” is a contemptible disgrace – one that must have James Connolly and the other great Irish revolutionaries spinning in their graves with disgust.