Apple and their ilk – remember it’s not so long since Microsoft was Ireland’s favourite taxpayer – save billions a year simply by offering to create employment here. While it would seem to make a lot of sense for a small country to buy jobs at the cost only of tax revenue that it would not have received anyway, it’s a pretty Faustian pact. For a start, what Apple is offering is not actually that great – just a few thousand jobs, and not necessarily quality, high-earning ones that feed skills into the economy. (That 200 at the new giant data center? Mostly maintenance.)
But worse, we are aiding and abetting an act which even if not illegal (as the European Commission believes), is certainly immoral. Apple is just creating artificial transactions between artificial sections of its own corporation. On paper this makes profit in Ireland; in reality of course the only transaction that has occurred was on a spreadsheet in Cupertino. The service we are offering our corporate clients is basically to act as if this is all somehow legit.
In doing so we are not merely competing with other countries. We are helping undermine the legitimate ability of countries to tax. In this race to the bottom, the only winners are the wealthy. Minister for Finance Michael Noonan claims that taxing Apple now would harm our reputation. But which reputation – the one of being a pushover for a handful of jobs? The one of being a country that sides with big business against the interests of our neighbours and of democracy itself?
Consider what harm this does to the reputation we do want: of a knowledge-based economy that pulls in investment thanks to a talented and educated workforce. There is some truth in that on the ground; people are working hard here to innovate and create businesses. But we are providing the perfect opportunity for competitors to say “That’s all bullshit, companies invest in Ireland because it’s a tax haven.”
And it isn’t easy to gainsay that view, because there’s truth in it too. The more government policy depends on low tax for foreign investment, the less we need bother with the education and infrastructure that would otherwise be the lure. (And which, we might mention in passing, would also stimulate domestic business.) The story about talent and education becomes just shtick, a hollow patter to distract from the financial shell game.
And this devalues us; not just as a place to do business, but as a country and as a people. It devalues our talent. It devalues the Masters degree I worked damned hard for. Indeed it devalues the very companies that invest here, because obviously they’re in it for short term balance-sheet gains rather than a long term investment in place and people.
Low corporation tax has been a useful tool, but that’s all it was ever meant to be – a way to help us transition from being an underdeveloped and largely agricultural economy into a diversified social democracy. The tool has now outlived its usefulness. There is no future in being the Cayman Islands of the EU.
Just to let you know there’s a new Phoenix out.