Business World

Monday 20 February 2017

Kevin Doyle: Can Michael Noonan really pretend it’s okay to rip up a €13bn winning Lotto ticket?

Ireland is about to make big headlines

Kevin Doyle Group Political Editor

Published 30/08/2016 | 11:27

SMALL countries make big news on the front pages of the international press for bad reasons.

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Today Ireland will make headlines across Europe, Asia and the serious media organisations in the United States.

This is big. In fact, €13bn plus interest is huge.

Government ministers are very worried on two fronts. Abroad they are concerned we will be stigmatised as a ‘tax haven’. And at home the fear is a massive public backlash as Michael Noonan does the equivalent of tearing up the winning lotto ticket.

The EU Commission wanted to send “a clear message” telling the world that companies cannot get “selective tax treatment” that would give them “a significant advantage over other businesses”.

Effectively they said the Irish Revenue Commissioners signed off on a ‘sweetheart’ deal for one of the world’s biggest companies.

The trade-off, which involves Apple sustaining 5,000 jobs in Cork, would seem reasonable to the casual observer but the EU don’t want a situation developing whereby multinationals can play countries off each other to lower their liabilities.

None of what is about to unfold comes as a surprise to the Cabinet – albeit Mr Noonan was under the impression that EU Commissioner Margrethe Vestager helpfully would hold off on an announcement until after October’s budget.

Taoiseach Enda Kenny is only too acutely aware of the risks involved having previously been stung by the ‘tax haven’ claims in May 2013.

At the time Ireland held the presidency of the EU and was on a drive to be seen as crusading against tax evasion.

Unfortunately for the Taoiseach, just days before he was due to chair a European summit on the issue, a group of politicians in Washington took aim across the Atlantic using the ‘haven’ word as ammunition.

Former US Republican presidential candidate John McCain and Democrat committee chair Carl Levin were among the most high-profile.

The New York Times, Wall Street Journal, Financial Times, Bloomberg and others dined out on it for days.

Since then the line from Fine Gael ministers has been consistent: “Ireland does not do special tax rate deals with companies.”

Today Michael Noonan’s immediate response was: “I disagree profoundly with the Commission’s decision.  Our tax system is founded on the strict application of the law, as enacted by the Oireachtas, without exception.”

Ministers are being recalled from their summer holidays to attend an emergency Cabinet meeting tomorrow.

Fianna Fáil will give Fine Gael back-up but the left-wing of Leinster House has been handed a massive grenade that will be thrown across the Dáil chamber on Budget Day.

The Independent Alliance TDs face another struggle with their conscience. What is better for the country? Take the money and room or stand-up to Europe and reject the windfall.

Because the Department of Finance weren’t expecting a decision until later in the autumn they let TDs head away for the recess without a detailed briefing.

Now they have only a matter of hours to find a palatable way for John Halligan and Finian McGrath to backtrack on public statements that the money should be used for schools and hospitals.

“They have made the mistake of talking before getting the full details on how it works,” said one Fine Gael minister last night, who was insistent that the Government must put up a united front if they are to stand any chance of fighting off the international and domestic criticism.

Also ignoring the money for a moment, if the Government were to accept the EU Commission’s findings then they would have to set up their own Commission of Investigation to find out who sanctioned such a deal for Apple. The Revenue Commissions have no such power in law.

That’s a bridge nobody wants to cross in Ireland – but Ms Vestager is determined to clamp down on what she sees as State-aid to companies.

As the former Danish finance minister she is well-known to Mr Noonan. He describes her as “a very personable, friendly person who knows Ireland fairly well”.

In mid-July they met to discuss the “presentation” of the Apple judgement but Mr Noonan came away with the impression it wouldn’t come until October and that she might “take into account” the time of Budget 2017.

That’s now been fast-tracked with the net effect that the Government must end silly season on very much on the offensive – fighting for long-term reputation or short-term popularity.

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