Sunday 25 September 2016

Brussels has delivered a nuclear weapon into heart of our economy

Published 02/09/2016 | 02:30

European Commissioner Margrethe Vestager, who delivered the EU's ruling on Apple's tax affairs here Photo: Eric Vidal/Reuters
European Commissioner Margrethe Vestager, who delivered the EU's ruling on Apple's tax affairs here Photo: Eric Vidal/Reuters

If I was not Irish, I think I would applaud the ruling against Apple by the European Commission. In general, I'm a supporter of lower taxes but I also believe that everyone should pay their fair share, whatever that may be. The same goes for companies. Apple does not pay its fair share in my opinion.

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Apple isn't alone in this, of course. Samsung, its biggest rival in the smartphone market, also tries to pay as little tax as possible.

According to information from Senator Rob Portman, given when Apple boss Tim Cook appeared before a US Senate committee in 2013, Samsung pays an effective tax rate of around 7pc on its worldwide profits.

But since I am Irish, I worry about the effect of this decision on the Irish economy and therefore on ordinary Irish people. If Richard Bruton's figure is correct, the multinationals employ 350,000 in this country. Writing in the Irish Independent, Donal O'Donovan said IDA-backed companies paid out €9bn in wages in 2014.

What would happen if the big multinationals vanished or downsized their workforces significantly because the tax advantage of being here was seriously eroded, thanks to the ruling against Apple? The loss incurred by the Irish economy would be much greater over the long term than the €13bn-plus windfall we'd get if Apple paid us what the European Commission reckons it owes us.

Despite its present buoyancy, the Irish economy faces three big threats. One is Brexit, the second is the Apple ruling and the third is the inherent instability of the eurozone.

All of these three dangers are related to the EU and may in time give rise to an Irish-style Euroscepticism. They may also cause further damage to the standing and reputation of our already battered political class, which we hope will make good decisions on behalf of the rest of us. By 'political class', I mean not only our politicians, but senior civil servants as well.

If it turns out that the really big, long-term, strategic decisions they have made for this country over the last few decades - joining the euro, for instance - were wrong, what way back is there for them? How do they restore their credibility? Does support for populist politics continue to increase?

I classify myself as pro-EEC, not pro-EU. I am all for a free trading bloc and a community of nations. But I am not in favour of ever-closer political union, never mind an EU 'super-state'.

Our political class is totally pro-EU. It has never put up any serious objection to an ever-closer political union and it enthusiastically supported the euro. We caused our rulers huge embarrassment when we voted against the Nice and Lisbon treaties, both of which were put to us a second time.

In one area and one alone have we resisted moves towards ever-closer union and that is in the area of taxation, especially corporate taxation. The EU is supposed to leave tax policy to the member states and as Declan Ganley reminded us on Twitter the other day, one of the reasons we voted for the Lisbon treaty second time around is because we received a further guarantee about our tax independence.

But now the European Commission has used a regulation banning unfair state aid to companies in order to interfere in our tax policy.

What our political class should by now have discovered is that all of their toadying to Brussels down all the years has won us very few favours there.

We were brutally treated when our economy tanked and we needed to be bailed out.

We'll be very lucky if the 'special place' of Ireland is considered when the UK is negotiating its exit from the EU, and now Brussels has delivered a nuclear weapon right into the heart of our economic policy. The only real hope for that policy now lies in a successful appeal to the European Court of Justice.

If I was British, I would probably have voted to stay in the EU in order to fight for the right kind of EU from within. However, a big part of me sympathised with the Leave side because I don't like the strong supra-national currents coursing through the institutions of the EU. I don't like the way in which the local is being overly diminished in favour of the global, the particular in favour of the universal.

What is truly appalling, though, is the fact that there is almost no debate whatsoever in this country about the EU. Not alone is there no debate about whether or not we should be in the EU, there isn't even a debate about the sort of EU we should be in.

Other EU leaders are willing to voice an opinion on this score. For example, no less a figure than Donald Tusk, the President of the European Council, said the EU should abandon its "utopian dreams" of ever-closer integration.

He said this in the run-up to the Brexit vote and he said it because he is sensible enough to know that continuing assaults on the sovereignty of the nation state, the latest example being the Apple ruling, are feeding Euroscepticism.

I'm not aware of any of our political leaders saying anything like this. They are too terrified to rock the boat.

And has that strategy gained them any credit? Absolutely not.

So it is time we had a debate about the EU, and more precisely about the kind of EU we wish to be a part of. Do we want the EU to be less respectful of national sovereignty or more respectful of it?

We should be arguing strongly for the latter.

Irish Independent

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