Thursday 29 September 2016

Politicians' reactions to Europe's ruling on Apple show who is fit to govern State - and who is not

Published 09/09/2016 | 02:30

'Learning to dance at Halligan's ball'
'Learning to dance at Halligan's ball'

Like it or not, the European Commission's ruling on Apple's Tax affairs and Ireland has been a defining political event in several ways. It has propelled Ireland's tax law on to the international stage in spectacular fashion by the charge of our State's complicity in tax evasion on a massive scale and prompted a review of our relationship with the European Union. It would be difficult to imagine a more damaging claim against Ireland's reputation. That is why the Government had no choice but to appeal the ruling to the European Courts.

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But the affair has been defining in another important way. It has revealed clear blue water between politicians and parties who are, in my view, fit to govern and those who are not.

Fianna Fáil and the Labour Party have given solid support to the Government on the appeal.

Meanwhile, Sinn Féin and the other parties of the far left, Social Democrats and the Greens, have created maximum uproar seeking to dine out on the Government's discomfort, regardless of the impact on Irish jobs and the national interest. Because of yet another wobble by Independent Alliance ministers, the decision to appeal was blocked for several days, exposing the Government to embarrassment and compromise. At a time when it needed to be surefooted, it was wrong-footed by members of the Cabinet behaving like Opposition deputies. They demanded clarifications, concessions, meetings with the Attorney General, and the recall of the Dail as a trade-off for their consent to the appeal. This is intolerable for any government, particularly on a major fiscal issue of national importance.

This week there was yet another row, with Independent Minister of State John Halligan seeking to barter his support for Government for improved cardiac services in University Hospital Waterford. An independent review of the matter has not recommended a second cath lab, and the Government is adamant it cannot go against clinical assessment of the hospital's needs. This is not the first stand-off with the Waterford TD and junior minister. Even as negotiations for government were in play the TD was a reluctant participant and although appointed a minister, he declared he would not pay water charges. On Mick Wallace's Bill on fatal foetal abnormality he voted against the Government, disregarding the Attorney General's advice that it was unconstitutional. On the Apple ruling he shared his colleagues' reluctance to support the Government appeal. He is now threatening to resign on principle if he fails to achieve his Waterford Hospital demands.

It is difficult to see now how the Government can continue to lurch from crisis to crisis on a weekly basis and retain public credibility. No government can function satisfactorily with such instability within Cabinet. The Government motion to appeal the Apple tax ruling was ultimately carried by 93 to 36 votes with the support of Labour and Fianna Fail, both parties demonstrating admirable maturity and restraint.

Unless alternative arrangements can be made, the country might be better served by a general election and a government with a clear majority.

What the Apple crisis has revealed is that Fianna Fáil, Fine Gael and Labour represent the centre ground of Irish politics; a steady axis of stability which the country needs as we emerge from the worst recession in our history and face into unprecedented challenges arising from Brexit and the European Commission assault on our tax sovereignty.

The Apple affair has also unleashed a wave of newfound handwringing about the morality or otherwise of multinationals and their global tax arrangements. And no one could condone tax evasion on a massive scale by multinationals, as alleged. But, reforms have been introduced to close off such tax avoidance schemes and Ireland has apparently been very much part of that OECD process. It is complicated stuff, normally left to Revenue authorities and tax accountants. So for most of us, the last two weeks has been a sudden immersion in the complex global workings of multinationals. As Peter Sutherland once said referring to the GATT negotiations, "if you are not confused, you are not listening".

But the net point of this whole debacle is that Ireland is entitled to protect its tax sovereignty from overreach by the Commission and in particular by the Commission imposing retrospective penalties on companies operating in Ireland fully compliant with our laws.

That is the issue and if deputies were genuinely motivated by the national interest, they would support that position. Instead we have some politicians and commentators ranting and raving about morality and global tax justice, as if taking part in a university debate.

Such existential debates were of scant interest to 400,000 Dubliners struggling to go about their business as Dublin Bus workers went on strike over pay.

With pay claims and industrial unrest by teachers, gardaí and nurses looming, the Finance Minister will be under pressure to increase spending as the October budget approaches. He would be wise to heed the Fiscal Advisory Council (FAC) warning that any further loosening of the purse strings beyond the agreed 'fiscal space' would be beyond the limits of prudent spending.

It was instructive to hear FAC Chairman Professor John McHale describing the Council as "institutionalising the memory of the economic crisis", providing information to the public and objective assessments of government spending with a view to avoiding the mistakes of the past. He attributed the 50pc surge in corporation tax receipts last year to the on-shoring of assets by multinationals like Apple and warning that any changes in the sector could also lead to a slowdown.

These are indeed challenging times for the minority Government. The solutions to the critical problems in health, housing and organised crime are expensive and cannot be achieved quickly.

Ministers are doing their best to govern against a background of instability, always conscious of the need to garner support from Fianna Fáil before any significant measure is passed in the Dáil.

To its credit, Fianna Fáil is behaving responsibly with impressive contributions to the Apple tax debate by Finance Spokesperson Michael McGrath.

Against a cacophony of populist hot air, ideological rants and posturing by the Opposition and their supporters in the media, his has been a steady and reassuring voice of reason. Despite the noise, people can be assured that the centre is holding.

Irish Independent

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