Tuesday 25 October 2016

Noonan must tear up winning Lotto ticket, then act like he's OK

Published 30/08/2016 | 02:30

Michael Noonan. Photo: Tom Burke
Michael Noonan. Photo: Tom Burke

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

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It's a point that my colleague Dan O'Brien made on radio yesterday but gets to the heart of the Apple problem.

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.

We are now just hours away from the EU Commission telling the world that in 1991 and again in 2007, 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 doesn't want a situation developing whereby multinationals can effectively 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 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 word 'haven' 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."

Regardless of whether the back-tax due from Apple is judged to be in hundreds of millions or the €19bn some projected, that line will hold in the coming days.

Fianna Fáil, which was in power under Charlie Haughey in 1991 and under Bertie Ahern in 2007, will back up Fine Gael.

However, the Independent Alliance has yet to be convinced by the idea that it's OK to reject free money.

Because the Department of Finance wasn't expecting a decision until later in the year, it let ministers head away for their summer break 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," one Fine Gael minister told the Irish Independent last night.

The Government must put up a united front if it is to stand any chance of fighting off the flow of international and domestic criticism.

Also ignoring the money for a moment, if the Cabinet were to accept the EU Commission's findings then it would have to set up its 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 in Ireland wants to cross - but Ms Vestager is determined to clamp down on what she sees as state-aid to companies.

As a 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 judgment but Mr Noonan came away with the impression it wouldn't come until October and that she might "take into account" the timing of Budget 2017.

She hasn't and the net effect is that the Government must end silly season very much on the offensive - fighting for long-term reputation over short-term popularity.

Irish Independent

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