Wednesday 26 October 2016

Apple ruling leaves us at great risk of isolation

Published 10/09/2016 | 02:30

Ireland finds itself increasingly isolated over the appeal of the Apple tax ruling Stock photo: AFP/Getty Images
Ireland finds itself increasingly isolated over the appeal of the Apple tax ruling Stock photo: AFP/Getty Images

Michael Noonan is probably not used to being received at the EU table like a side dish that has not been ordered. It may be too early for frost, but there was definitely an autumnal chill in the air as the two-day finance ministers' meeting in Bratislava began. Ireland finds itself increasingly isolated over the appeal of the Apple tax ruling.

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In the eyes of the EU tax czar Pierre Moscovici, it was a "strange decision", while Austria's finance minister, Hans Jörg Schelling, felt he would take the money, given the chance. Mr Schelling even said that the Austrian government is examining "intensively" whether some of the cash is owed to Austria. Italy, France, and Spain are apparently doing the same. This makes a nonsense of claims that a €13bn golden carrot was ours for the taking.

But Mr Noonan was always going to find himself on the back foot. France and Germany threw their support behind the Commission last week. Both countries have long had their eyes on Ireland's 12.5pc tax rate. They have two of the highest corporation tax rates with 30.2pc and 34.4pc respectively; although companies in France were found to be only paying a tax on profits of 7.4pc.

There has been a push towards EU tax harmonisation for a number of years. In 2011, a move was defeated which would have seen multinationals pay their tax for all the EU into a pool and the money would be doled out to states within the region according to a formula. Plans for further cross-border intervention on tax arrangements across the zone are not new. But that there should be a renewed push to achieve this in the immediate aftershock of Brexit when many countries are questioning their relationships with Brussels is ill-advised. Once more, Paris and Munich are calling the tune.

Now such moves are indeed in prospect it is vital that they be teased out, and voted upon, and definitely not decided by decree. Were we not told that acceptance of Lisbon II would ringfence our corporate tax rate?

Growing concerns about a democratic deficit, and a distinct sense of mission creep, as Brussels seeks to exert more and more control over government finances must be addressed. Even the most loyal of Europhiles are becoming disconcerted. Ireland's overreliance on Foreign Direct Investment is seen by some as a potential fault-line. A major international downturn would leave us overly exposed.

Yet, few expected any risk to foreign investment here would actually come through clumsy interference from Brussels. The critical driver of investment in a country is stability and certainty. The European Commission removed both with its Apple ruling.

State continues to come up short on housing plan

The fact rents have risen for a 50th month in a row speaks of the failure to tackle the housing crisis. The hopeless inability to cope with the shortage of accommodation is taking a terrible toll on households.

Now comes a warning that renters face a "rental timebomb" when a price freeze ends next year.

This means that one in five homes in the country is caught in a trap. With house prices surging and the lack of building guaranteeing that demand far outstrips supply, the only was is up in the cost of rent.

Because so few houses are coming on the market the 700,000 people in this country who rent are facing into a bleak future, according to Economist Dermot O'Leary.

Tenants are caught in a vice as Government measures to take the heat out of the market have failed hopelessly.

Clearly, the State needs to accelerate housing plans and regulation of rent rises must also be kept under review.

Irish Independent

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