Cook arrives bearing gifts, but his visit stirs echoes
Published 15/11/2015 | 02:30
'Young people of Ireland, I love you," declared Pope John Paul to the youth of Ireland back in 1979 during a mass at Galway race course. Ireland's youth reciprocated. They loved their pontiff.
If Pope Francis arrives in Ireland for the 'Catholic World Meeting of Families' in 2018 he is unlikely to receive such a rapturous reception. Ireland has moved on. Today, its heroes and heroines are found elsewhere.
Last week, a hero of Ireland's youth landed in Dublin. He was hardly a replica of John Paul II.
He was rich and gay. While the Pope's role in 1979 was to bring spiritual salvation, Tim Cook of Apple's mission on Wednesday was to deliver dollars to Ireland.
Tim's only reference to God was when he insisted that " among the greatest gifts that God has given me was being gay."
His holiness would have dropped his crozier on the racecourse turf in shock if he had heard those words back in 1979. Young and old wanted to meet Cook last week, just like they sought an audience with the Pope 36 years ago.
Politicians, left and right, competed to heap superlatives on him and Apple. Academics escorted him around Trinity College and the youth of Ireland elbowed each other for selfies with the multinational boss.
Cook was spared the joys of a warm-up act from Bishop Eamon Casey and Father Michael Cleary who performed for John Paul, but he was given an ecstatic reception on his whistle-stop tour by the youth of Trinity College. The media coverage of his exchanges with the students, his acceptance of the University Philosophical Society's Gold Medal of Honorary Patronage and his tolerance of politicians vying for association with his visit signalled that this was a major public relations exercise. Cook meant business.
Cook came bearing 1,000 jobs for Cork. Everybody wanted to be in on the act.
The Taoiseach, the Tanaiste, ministers Michael Noonan, Richard Bruton, Simon Coveney, Sean Sherlock and numerous IDA top brass vied to congratulate him.
Jobs are gold dust to politicians seeking re-election. Cook delivered. Enda owes him big time. No doubt this trip was originally fixed to coincide with a November election. Kenny could have been announcing a jobs bonanza in the heat of battle.
Plan A may not have worked, but the traditional trade-off between corporate giant and little state is alive and well. The multinationals bring the jobs, the Government brings the tax breaks. The stakes are gigantic. The question is often asked, who is the poodle, the multinational or the Irish Government?
Multinationals have been steering a course around the maze of global taxation rules for years.
While Apple is the main driver, Ireland has proved the perfect, willing vehicle for their tax acrobatics. Both have benefited. Yet Tim was not dropping in for a routine pat-on-the-back visit. Apple smells trouble.
The dreaded European Commission is investigating the terms of the tax pact between Ireland and Apple. It was expected to rule later this month that Ireland has illegally provided state aid to Apple by assisting it to shuffle its profits around the world.
The Commission's verdict has been inexplicably postponed - probably until after the election - but when the inevitable happens, Ireland and Apple will need each other. The consequences of Ireland losing its case will be the repayment of millions, even billions, from Apple to us in lost taxes.
Ireland is certain to appeal an adverse ruling to the European Court of Justice. Last week, Tim Cook insisted that he would stand shoulder to shoulder with Ireland when it challenged the decision. You bet he will. The whole deck of cards is threatening to tumble.
Ireland fears that any order from Europe to claim billions in back-tax from Apple will scare off other multinationals enjoying equally questionable tax schemes.
There could even be an exodus. Apple fears the end of super-lucrative loopholes left wide open by Ireland's generous revenue commissioners. He might be forced to look elsewhere. Cook came to Cork to reassure us - a trifle unconvincingly - that Apple was embedded, whatever the tax consequences of an unpalatable order from Europe.
Ireland badly needs that reassurance. There is a danger that once Apple's arrangements are scuppered, other multinational companies may wobble. The deals made with our foreign investors have never been fully transparent, but we know that billions of profits have been spirited through Ireland to tropical tax havens, incurring token tax on the way. We know that figures for multinational profits booked to Ireland are often exactly what their tax-efficient bosses decide they are, rather than a reflection of reality.
There is no argument about our need for these giants. Ireland has benefited. US giants have created jobs for the young people who were so enthusiastic about Cook last week.
Despite our generous tax give-away regime, we have reaped a harvest of corporate taxes from multinationals which we cannot afford to lose.
Indeed, multinationals were our greatest supporters during the collapse of the Celtic Tiger, the most vibrant part of an economy in free fall.
And that position - of employer and saviour in our hour of need - is one of unparalleled strength. They are the source of the export boom, the key to our recovering economy, the biggest player in the corporate tax game. Consequently, they carry huge political clout.
Their strength was starkly demonstrated in the October Exchequer Figures released last week. In a shock announcement it emerged that the 2015 takings from corporate tax were €800m ahead of target. The returns from this source are rocketing. About 80pc of this year's surprise rise has come from multinationals, including Apple. There is widespread gossip around government buildings that part of the €800m increase is due to a single multinational's decision to book substantial profits, previously booked elsewhere, to Ireland.
At the stroke of a pen a single overseas company can have a dramatic effect on the public finances. Insiders suggest that the identity of the benefactor is Tim Cook's Apple. Who is who's poodle now?
In total, the State received €4.75bn from corporate taxes in the first 10 months of 2015, €2.2bn ahead of target. The deficit is being bridged at the speed of lightning. So our foreign benefactors are turning on the tax tap at will. They could equally easily turn it off in the blink of an eye. The Irish economy has become dependent on the whims of multinationals. Yet we need them for more than employment. We need them for the taxes they pay - albeit too little. We need them for growth. We need them for the massive spin-off spending that they bring. They are our lifeline and our road to recovery.
Suddenly, Tim Cook and his ilk are the answer to the prayers of a Government seeking re-election. Alternatively, they could be its executioners. His visit last week was full of goodwill. A less well-disposed corporate chief could tighten the noose.
Such a dominant pillar of commercial power in the heart of the Irish economy has eerie echoes of the construction industry in 2007 just before the housing collapse. At that time we had two dynamos - construction and multinationals. Eight years ago the massive Exchequer boom, funded from stamp duty and other construction industry taxes, fuelled the economy. When the property frenzy ended, the accompanying revenues vanished and the public finances were empty. A terrible recession followed. We were left with the multinationals. They have taken full advantage of their position of power.
Now there is one.
Tim Cook's visit was a show of solidarity as Europe closes in on our sweetheart deals with foreign investors. He is a friend of Ireland, but his visit serves as a reminder that we are now perilously vulnerable to a change of mood by those corporate bodies who do not have the same staying power as the Vatican.