Forget the 'easy money' option - we must use rat-like cunning to keep multinationals here
Published 03/09/2016 | 02:30
Those of us of a certain vintage were sometimes tempted to take consolation from a much overused aside, uttered by a one-time high flyer in the world of Fleet Street journalism.
Nicholas Tomalin, having graduated from Cambridge, entered the cut-throat jungle of the national media with a certain wide-eyed innocence; he was determined to play by the rules.
But grim reality soon set in, and he realised survival in the sometimes grubby trade would require a different approach. The problem was that many of his competitors refused to observe any rules of engagement, imaginary or otherwise. In time Tomalin would develop a decidedly more cynical view of things.
''The only qualities essential for real success in journalism are ''rat-like cunning, a plausible manner, and a little literary style," he concluded.
The phrase ''rat-like cunning'' came to mind these last few days as possibly the best tactic Ireland should adopt in the current Apple controversy. The figures involved - €13 billion and more, which in theory could enter the national coffers - are stratospheric. But as with all high-level tax affairs, complexity abounds. Working out the detailed sums involved is a job for those with fairly sophisticated financial skills.
However, regardless of all the dizzying amounts of cash being mentioned, from an Irish perspective one overwhelming reality dominates everything. Luring the Apples of this world to our shores has created around 200,000 jobs in Ireland. It is fair to say if these jobs were not located here, most of the workers involved would be included in our still far too high emigration figures.
The fact is that our capacity to lure foreign firms to set up manufacturing and production operations in Ireland has been one of the singular success stories of Irish life for more than three decades. It has also left other countries seething with envy. So-called multi-nationals may not have a particularly good press, but even the most developed economies are desperate to get them on board.
We have some distinct advantages, particularly in attracting American firms: we are English speaking, and there are intangible cultural links which have evolved over two centuries. And then there is the question of tax. All countries use their taxation systems to garner revenue and stimulate economic activity. Other EU members have also been using the taxation carrot in the fiercely competitive melting pot of trying to attract "foreign direct investment'' related jobs.
But trying to achieve what the late Mr Tomalin might describe as "a level playing field'' is nigh impossible. Each country has its own agenda and set of priorities, and these change from time to time. But this has not halted a growing resentment of Ireland, and its proven success in the area of multinational-generated job creation, linked to tax incentives.
Be all that as it may, we should continue to offer as attractive a tax deal as is possible to companies such as Apple in trying to persuade them to set up operations here. There is also the ongoing challenge of ensuring they remain in Ireland. The totality of the package we put on the table - financial and otherwise - must be more attractive than other countries competing for their business. That's the bottom line.
Back in the day when the rules were more lax we certainly sailed close to the wind. But we were not alone. Holland, Belgium and Luxembourg have all been queried about their corporate tax rates. And while the French have their official "top line" figure, they are not beyond doing a deal by way of "allowances and write-offs" should the occasion demand.
Indeed, a perilous time in our national life was during the bank bailout days, when French President at the time, Nicolas Sarkozy, wanted to use our weakened status to try and force us to make our tax regime less attractive to multinationals.
And when it comes to transparency in such matters, our nearest neighbour has some of the most secretive taxation operations in the world. The links between the City of London and locations such as the Caymen Islands, Jersey, the British Virgin Islands, and the Isle of Man, are a maze which even the best brains in Brussels seem unable to navigate.
There is a problem - which may not be fully solvable - with huge transnational companies and the amount of tax they should pay in a particular jurisdiction. Apple should certainly be paying a lot more tax, but the core problem could be that for political reasons, the US government is unwilling to confront some of its major corporations on this issue.
They complain about the EU approach, who in turn this week suggested Ireland is not playing fair. However, we are but a bit player in a world where self-interest ensures a host of countries are less than candid about their tax affairs. Apple is going to contest this EU ruling - and Ireland is also right to do so. The rules in the past may have been more vague than they are now, but as far as our Revenue Commissioners are concerned, we operated within the law.
Even if we agreed in theory to taking the €13bn, we would never get our hands on the total amount - a host of other countries would be lining up to get their share. More powerful voices on the international stage should get their act together in sorting out the tax liabilities of the Apples of this world. But the problem is they can't agree on any coherent plan.
In the meantime, we should avoid being ensnared in a trap with the promise of short-term easy money. Going forward a policy of "rat-like cunning" is needed. Let's try and double that multinational jobs figure of 200,000 to 400,000 in the years ahead - slashing our jobless rate and easing the agony of emigration.