News Analysis

Saturday 23 August 2014

Rainer Kiebat: Talk of corporate levies too taxing for average German

Published 25/10/2013 | 02:00

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Rainer Kiebat

'You Germans must be jumping up and down about our corporate tax," a colleague quipped last week. Earlier in the week, noises on Ireland and everything that's wrong about taxes over here were made by two SPD politicians (Germany's centre-left Social Democrats) on the exploratory talks on a new coalition in Berlin with Angela Merkel's CDU (Germany's centre-right Christian Democrats).

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Carsten Schneider, the SPD budget specialist in the Bundestag, came charging first: "The Irish need to do something about their corporate tax and agree to a financial transaction tax before there can be any hope of more EU money through the ESM for their banks, or a new credit-line."

Listen to that, Paddy!

The politician who entered parliament as the youngest ever MP at the tender age of 22, was closely followed by his boss, SPD general secretary Andrea Nahles: "I'm very sorry for Ireland, but the corporate tax rate is simply too low."

Take that, Bono!

"Oh – isn't he paying his taxes in Holland anyway?" I was thinking, but still the message was loud and clear. Never mind Paddy or Bono – what would Michael Noonan have to say for himself?

"We are 100pc committed to the 12.5pc corporate tax rate."

Schneider probably won't be seen at a Paddy's Day parade after this, and Nahles might delete 'Beautiful Day' from her iPod. Or ditch Apple products altogether – aren't they based in Ireland on one hand but "stateless" for tax purposes on the other? Some of these companies remain "stateless", but not for much longer, according to Noonan's Budget speech. Anyone concerned should read Ireland's new international tax strategy statement.

Pascal already did. Pascal Saint-Amans that is – the OECD official in charge of global corporation tax gave the document a 'Like'! Isn't Facebook at it in Dublin as well? Pascal probably already received a 'Dislike' from Andrea and Carsten.

Noonan's comments on corporate tax and the international tax strategy statement were also received by the German Finance Ministry. In a written response to this writer a spokesperson for the Bundesfinanzministerium led by Dr Wolfgang Schauble said "we are waiting for detailed suggestions" but at the same time "any dismantling of preference-regimes" is welcomed.

Bringing the OECD into the equation certainly was a wise move, as the same spokesperson claims that "Germany has been pushing the OECD's action plan on profit-reduction and moving from the start".

Will Schauble stay in the Finance Ministry? Ireland should hope so, because the SPD want one of their own at Schauble's desk. Two names are making the rounds according to the FAZ newspaper but ambitious as he may be, Schneider is not one of them.

Frank-Walter Steinmeier and Thomas Oppermann are the two leading figures of the SPD parliamentary party mentioned for the post and the Social Democrat leader Sigmar Gabriel – who has first refusal on any ministry the SPD can negotiate in the weeks ahead – is also rumoured to be interested.

Merkel's CDU is keeping tight-lipped on the talks and a spokesperson claims not to have heard any SPD demands regarding Ireland and also wouldn't be drawn on the party's insistence on keeping Schauble in office.

When this writer contacted her office, Nahles, the SPD general secretary, wouldn't comment on Irish tax affairs being discussed in the coalition talks, which are supposed to conclude before Christmas.

SO what does the German business community make of it all? Do they share the concerns of the social-democratic advocates of fair taxation? According to Klaus Wuggazer, Editor of the 'Thuringer Allgemeine' newspaper in Erfurt, local business people don't talk much about Irish corporation tax.

"They don't even talk about German corporation tax a lot," says the journalist, who is based in Schneider's constituency.

Do Hans & Helga on the streets of other German cities talk about Irish tax affairs? Not really, according to 'Bild', Germany's populist newspaper.

"Even though many people heard about Ireland seducing the likes of Google with low taxes," says editor Dirk Benninghoff, "that alone doesn't generate any demands to politicians on the doorsteps".

Quite a few people in Germany are more interested in a TV series like 'Unsere Farm in Irland' ('Our Farm in Ireland') – something like 'Little House in the Prairie'.

Six episodes of the drama averaged 15pc in viewership. In the recent election, 42pc voted for the CDU/CSU (the Bavarian sister party) and 26pc for the SPD.

Politics is a numbers game and for the time being, Ireland's corporate tax rate of 12.5pc will stand.

Rainer Kiebat is a German freelance journalist based in Dublin. He moved to Ireland in 1997 and writes for the Dusseldorf-based daily 'WZ', as well as the German online magazine 'Irish Net'.

Irish Independent

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