It doesn't matter how much we do, it will never be enough. The world hasn't recovered from the financial crisis of 2008, but things are getting better.
Ireland exited the bailout last year and our resident IMF watchdog has gone home. With the exception of capital taxes, revenue was ahead of target last month. Employment is rising and with it the yield from income tax, PRSI and the Universal Social Charge are increasing too. Property prices are going up and even consumer confidence is coming back, but not enough to float our boats.
In spite of this, those who are holding the purse strings in Brussels claim our continued economic growth is far from certain and they want even more belt-tightening. We are committed to raising taxes to bring in another €2bn next year so that we can get our balance of payments deficit down to three per cent of GDP.
Even our own Finance Minister, Michael Noonan, might have had enough of them this time. He might have a few surprises up his sleeve, which won't hit the public at large.
There are planned changes to the tax provisions for oil and gas exploration that will seek a higher financial return from exploration licences and whatever discoveries they make. But we could be waiting a long time for that.
Even corporation tax could bring in more, even though the Government promised that the 12.5 per cent rate of tax is here to stay. The EU wants to change how companies are taxed, particularly to combat tax avoidance used by multinational companies to cut their tax bills. If you operate out of Ireland, you are guaranteed a tax rate of 12.5 per cent on your profits, irrespective of where your profits are earned.
The EU would tax companies where they make their sales. That could diminish Ireland's attractiveness for foreign companies. But it's not just our tax rate that attracts them. We have an extensive tax treaty network that facilitates international business and the movement of funds and intellectual property around the world. The profit after tax is paramount, but much more than tax is at stake. We are a sophisticated, highly developed centre for finance and business that facilitates global trade. That won't change.
As tax havens are shut down, or forced to reveal who uses them, the authorities gain useful information to help get a bigger slice of the pie. But international trade is complex and the big companies are calling the shots. They talk about evasion, but most companies act within the rules. If they are big enough, they can go where the rules suit them best.
There are established accounting procedures and practices that companies must follow when calculating their profits. In general, the Revenue authorities follow the same rules, subject to variations that are laid down in tax law. It's up to national governments to write the rules.
What distinguishes tax havens from legitimate locations is the substance of the activities in the country of residence. There are certain minimum standards that the authorities expect to find, but in between the lines are blurred.
You can talk about tax havens, or fairness and inequality, but these structures won't be given up, or broken down easily. Meanwhile, as the sweetheart deals of the past are unravelled for Google, Apple and many others, we might collect more of the 12.5 per cent we expected to get all along and not the two per cent we sometimes end up with. If we do, our tax revenues could rise without increasing the burden for Irish works. But we won't get much more in corporation tax than we already do – nearly all the tax is paid by less than one per cent of companies. If we get greedy, they have other places to go.
The IMF may be more supportive of Ireland's position than the EU, but even it has concerns and has advised we should stick to the €2bn that we are committed to. It warns that global recovery is by no means certain, or sustainable and we need to build up a financial reserve again as soon as we can.
Now that we've got our sovereignty back we can expect a different approach in the next Budget, even if it means stepping out on a limb. But the cupboard is still empty. Labour got a fright in the recent elections and Fine Gael can see the writing on the wall too.
They know they must do something, the question is how. For the reasons I've mentioned, it might be possible to target companies to pay more, without even changing the rate. It's only a matter of budgetary arithmetic.
Water charges are on the way and they will take their toll. Apart from that, we can only hope to maintain the status quo, but for many who are struggling, that is not enough. Companies that are paying less than 12.5 per cent might yield more, but there will be no let-up for the rest until the system is overhauled.
Batten down the hatches and prepare to struggle along. But apart from water charges, we might get off the hook from any higher income taxes. Those returning to work will provide the extra tax the system needs.
James Fitzsimons is an independent financial adviser specialising in tax and financial planning.