Richard Curran: Panama papers show Britannia's treasure islands
British Prime Minister David Cameron had a lot on his plate last week. In the middle of a battle to keep the UK in the European Union, the Panama papers exploded on his radar.
Whatever about him fudging questions about whether he had benefited from his late father's offshore investment vehicle, the Brits were the stars of the Panama show when it came to tax avoidance.
Mossack Fonseca's 11.1 million documents showed British overseas territories were the firm's favourite locations for setting up offshore companies. More than half of the offshore companies set up by the Panamanian law firm were in the British Virgin Islands.
Other British overseas territories such as Bermuda and the Cayman Islands are also major tax havens. While not subject to direct rule, these territories are dependencies of the UK.
In fact, the British Virgin Islands was the fifth largest recipient of foreign direct investment globally in 2012 with inflows of $72bn. The British island of Jersey is custodian to £1.2tn in wealth. The Cayman Islands is the world's leading centre for hedge funds.
It was only 18 months ago that British Prime Minister David Cameron got stuck into Ireland about our corporate tax arrangements. Speaking about Irish tax restructures, he said: "There is the so-called Double Irish, the parsing of profits through other low-tax or no-tax regimes. That is now being cracked down on and about time too".
The Panama papers show many tax avoidance activities that are legal while also putting structures in place for clients which they might choose to abuse in various illegal ways.
Given that Cameron has presented himself as tough on tax avoidance, it is ironic that the UK and its dependencies featured so strongly in the papers, not to mention Cameron's dad.
The UK is one of the world centres for wealth management. The activities of the dependencies are plugged into the entire wealth management industry in the UK and into the wider British economy.
There is little political will to radically alter disclosure levels given the fact that Cameron himself intervened in 2013 with a letter to the EU pushing to have family trusts exempted from new disclosure rules.
Undoubtedly the world of Corporation Tax is changing. The UK, however, wants to protect the financial industries built up in its dependencies while not alienating Brussels.
This moves the debate into Brexit territory. Exiting the EU will take a lot of pressure off the UK when it comes to offshore tax havens but it will lose out in Europe. Staying in could heighten tensions between Brussels and London.
Ireland has used tax policies to attract foreign multinationals. The UK, unhappy about some of our policies, is nevertheless better placed to clean up the global wealth management industry.
That phrase about glass houses and stones comes to mind.
DAA's 'chocks away' with second runway
The Dublin Airport Authority must have deliberated for a long time on how best to proceed with its new runway.
It has planning permission. It has the money and the go ahead from the regulator to add a little on to its passenger fees to pay for it. The rationale for building it and the demand also appear there.
The problems are these restrictions about flight movements. An Bord Pleanala decided to restrict early morning and night-time flight movements as part of the permission when it was granted several years ago.
So according to the planning permission, there can be only 65 flight movements from 11pm to 7am. Right now, there are 99.
Residents' concerns seem well founded. Who wants to live with greater noise? But there is something odd about building a second runway and having fewer night-time flight movements.
The investment is enormous, with the cost likely to hit €320m for the runway and ancillary works, plus a further €50m cost to the Irish Aviation Authority to build a new - taller - control tower.
The logic of the planning would seem to suggest that if a second runway is built, residents will have fewer flight movements at night and the early morning than they have right now. This would add to timetable pressures during the day which could undermine the return on the investment.
Yet, noise levels can affect residents in approach flight paths to the airport even where they are not even close to the facility. The noise is a lot less, but can be heard quite a distance from the airport.
The DAA says it is going ahead but wants to contest those two conditions. It isn't prepared to say that it will not proceed if it doesn't get them changed. So what happens if it isn't successful in getting the conditions removed or at least amended.
Expect a protracted compromise to surface here eventually and a second runway to go ahead. Willie Walsh's IAG alone could keep it going if his plans for Aer Lingus work out.
Perhaps the most thorny issue will be that €320m. Airlines will scrutinise the cost in the belief that they will end up paying for it.
Why Ireland is better off without Pfizer inversion
The cancellation of the mega $160bn Pfizer/Allergan merger during the week was all about tax.
Irish tax advisers may have been marketing the tax advantages of Irish-based inversions for years - but the approach at home was to blame the Americans.
Junior finance minister Simon Harris said back in 2014 "inversions are of no benefit to this country. They don't bring jobs. They don't bring tax here. In fact there is a potential cost here."
This was just after we had changed our own rules which allowed some companies registered in Ireland not to be tax resident anywhere. Ireland has dallied with reputational damage on this front for years.
It started in 2004 when then finance minister Charlie McCreevy introduced special incentives to encourage international companies to set up holding companies or headquarters in Ireland.
The measures had nothing to do with attracting serious foreign direct investment, but were about helping to create a handful of jobs for accountants and lawyers here, as well as having directors of large multinationals fly into Dublin once a month to make some decisions.
It really annoyed the British, and it didn't play well in Berlin either. I remember a senior partner in a major Dublin law firm at the time telling me it was a mistake. He said his firm would benefit from it, so he would not say it publicly - but Ireland was courting trouble for very little real investment gain.
He was absolutely right. Yet when Brian Cowen was finance minister, he introduced fresh initiatives in that broad area around Capital Gains Tax and tax on foreign dividends. He slashed the tax rate on certain foreign dividends by 50pc which prompted British companies to examine shifting domicile to Ireland.
The end of the tax driven inversion is actually good for Ireland. It isn't the kind of "investment" we should seek to attract. It was of some Corporation Tax benefit but didn't yield much by way of jobs.
Pfizer will now have to come up with an alternative strategy to achieve growth - one that is built on the drug industry rather than the tax avoidance industry. Tax-driven mergers don't pass for a long-term future strategy, as Pfizer may be about to find out.
Ever since Lipitor, the biggest-selling drug ever, went off patent in 2011, Pfizer profits have not been the same. Its sales this year will be about $10bn lower than 2011.
This is after spending over $20bn on acquisitions and shelling out $44bn in share buy-backs in the last five years to steady its earnings per share figure.
Given the circumstances, having Pfizer/Allergan executives fly into Dublin for board meetings and other key decision-making would not have been worth the wider reputational flack we were taking - even if it wasn't our fault.
Sunday Indo Business