Monday 18 February 2019

Noonan may have good reasons to appeal Apple ruling, but rejecting €13bn will haunt Government

Cormac McQuinn

Cormac McQuinn

Europe wants us to demand €13bn in back taxes from Apple. Sounds great right?

That’d build a lot of houses, there’ll be more beds in hospitals, the USC can be scrapped, and we’ll have new roads and railways coming out of our ears.

So why is Finance Minister Michael Noonan saying we’ll fight the European Commission’s ruling that Apple tax arrangements here were illegal and amounted to state aid? 

Essentially it’s because there’s a massive concern it’ll damage Ireland’s reputation among the multinational corporations that bring so many jobs to our shores.

And if that happens it’ll hurt our growing economy which is only just beginning to recover from the misery of the crash. 

Mr Noonan himself put it in a typically colourful manner when he explained this afternoon why he wants the government to appeal the European decision.

Read more: Noonan: Taking €13bn in Apple taxes would be 'destroying the future for short-term advantage'

“To do anything else would be like eating the seed potatoes and destroying the future for people for short term advantage now,” he argued. 

The Department of Finance position is that the Government disagrees profoundly with the Commission’s analysis of Apple’s tax payments in Ireland. It insists that Ireland did not give favourable tax treatment to Apple.

Mr Noonan told RTÉ: “The Revenue Commissioners collected every euro of tax that's due from profits made by Apple in Cork on their Irish activities”. 

He added: “I don’t know whether you have an Apple iPhone or not near you but if you look at the small print on the back of it, it says designed in California, manufactured in China and that means that any profits that accrued, didn’t accrue in Ireland, so I can’t see why the tax liability is in Ireland.”

Fine Gael are concerned that not appealing the European ruling would damage Ireland’s reputation and economic prospects and argue that the decision is wrong because both the State and Apple acted lawfully in their tax dealings. 

They say that even if the money ends up in the State's coffers, under EU rules it would have to be spent in the most part on paying down the national debt.

Read more: Kevin Doyle: Can Michael Noonan really pretend it’s okay to rip up a €13bn winning Lotto ticket?

But regardless of Mr Noonan’s reasons for seeking to fight the ruling, effectively rejecting €13bn will create a serious political headache for his party. 

Opposition groups, including Sinn Féin and AAA-PBP, insist that Ireland should not appeal and should take the money to be spent on vital services here.

Meanwhile, there’s even potential for trouble within the minority government with Independent Alliance Minister John Halligan saying much the same thing at the weekend. 

His grouping today says they are “shocked” by the European decision and that they are reviewing it, including by bringing in their own independent experts. 

Michael Noonan has called the Commmission's ruling “bizarre” saying there’s “no economic basis for this decision".

That may be the case but there’s also no denying it’s also a somewhat bizarre situation for a state to be fighting against a potential €13bn windfall – even if as the government argue there are very good reasons for doing so. 

This issue will haunt the government every time has to cut services anywhere or says it can’t yet fund a new infrastructure project.

You can be sure the opposition will not be shy about rubbing their faces in it.

Online Editors

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