Friday 24 January 2020

Andrea Pappin: Enda, here’s a 5-point EU plan

SO THIS Thursday and Friday all EU leaders are sitting down to talk about their favourite subject – yet more Treaties. But before we jump on the plane to this meetings, here is a 5-point plan for our government regarding our approach to the EU. And who doesn’t love a 5-point plan?

1. We have a very big referendum stick that we need to swing around a lot

We are one of the few countries that knows it has to put this Treaty to referendum – and that is something that we will be using when it comes to Friday’s Treaty chat with other EU leaders.



You know that face that builders or mechanics make when they are giving you a quote for something – you know that suck-through-your-teeth-look-a-bit-worried-about-whether-this-can-be-done-and-how-much-will-it-cost face? Well we need to do that a lot at this meeting on Friday, saying something like, “Yes, we do agree that needs to be done but *make bad quote face* unfortunately we’re just not sure if that will wash with the Irish electorate at the polling station…”



That way we could get a fair amount of what we want into this discussion. And that depends on what we us working out what we want from the negotiations – which brings me nicely onto the second point:



3. Corporate tax is as much of an issue as we make it

Remember the boss in the Inspector Clouseau movies that got a twitch in his eye when Clouseau got away with something? Yeah, that’s the kind of twitch all French Governments get when they think about our low corporate tax rate.



The French have always hated our low corporate tax rate ever since we brought it in. To them, it is something anathema to them – low taxes. And they do not like it. They will never like it. And their reaction is always the same about it. [cue twitch]



But what is interesting is how similar is our reaction to all this – we seem to forget that the French have and will always hate our 12.5%. We seem to get paralysed with the fear that it’s going to be taken from us by them and because no one anywhere can give an iron-clad, 100% guarantee that our corporate tax rate won’t change – a guarantee that can’t be given about many things may I add, like being any of us being run over by a bus tomorrow – we get utterly hung up on this issue of our corporate tax rate being snatched away.



Then that conversation seems to pass as the media moves onto the next story, our tax rate doesn’t ever change in spite of the fear conversations yet we don’t really think about that… until the next time the French mention they don’t like it and we collectively clench again about it all.



There is always a chance things can change but I still see this as highly unlikely, despite the fact I cannot read Tarot cards or have a crystal ball. And it’s unlikely for the following reasons – which I’d love if we could talk about when threats to our corporate tax rate happen:



We’re not on our own. It’s pretty damn unlikely that our corporate tax rate is going to be singled out because that’s not how the EU does things (it’s actually against the very basis of the EU, it’s everyone or no one if you think about it). So if that’s the case then, all corporate tax rates are going to be hit – now tell that to Cyrus (10%), Slovakia (20%) and Estonia (21%) who will also be in the firing line. And there are more in this gang who won’t like this – including the UK who just won’t like EU meddling in this kind of stuff.

Corporate tax, according to PWC, makes up on average around two-fifths of what a company pays in its overall tax bill, so what you’ve really got to look at is the effective rate of tax – basically what will a company have to actually sign the cheque for when all other taxes, exemptions, waivers and incentives are all added in. This is where it gets properly interesting – because France’s effective rate of tax is lower than Ireland’s. If you want to read more about this, check out Ronan Lyons’s rather excellent article about this – it is well worth a read.

So if we walk into that room on Friday, fixated on our corporate tax bill, our fellow EU leaders will smell this opportunity – they will hem and haw about all this, pretend it’s much more difficult than it actually is and will then ‘facilitate’ our request to keep our 12.5pc and we will see this as a win. Which may not be an issue that is even on the table.



Now if it is a real and genuine issue that is becoming a requirement of this deal, then that is another matter. But let’s not walk in there making this an issue when it may not even be up for discussion.



How about we walk in with a very obvious issue written down on a piece of paper that we can slide across the table to Merkel, which says:



3. How about a write down of that debt?

Instead of talking about the corporation tax issue which may not be such an issue, we should be using our referendum card for something much bigger – like getting a write down on our banking debt. It’s not impossible at all – after all, we’re fairly good at extracting cash from these kinds of negotiations [cue image of Albert Reynolds waving a very large cheque coming back from the Maastricht negotiations].



I know that we may think this is a bit ‘crass’ to talk about this issue – but it’s one that has overwhelming support at home and this is the opportunity to get this on the table and written down. Better to have tried and refused then not even asking.



And this is one that really could make one hell of a difference in lubricating a referendum here at home. I know, we’re pretty shallow about all this here – basically our Irish policy for EU deals is “buy us a few drinks and we’re yours”. Which brings us onto our next point, which we probably don’t have time to do before Friday but needs so desperately to be done, which is why it’s worth a mention here in this plan:



4. How about we talk more about where we would like Europe to go and less about what can we get from it

That may sound all a bit wishy-washy but hear me out for a second. We have built a relationship with EU which is largely based on what we get from it, rather than talking about what we could contribute and what comes along with the big cheque.



Prime example is that very image of Albert Reynolds coming back from the Maastricht Treaty negotiations saying that “£8billion was in the bag” if we just voted yes. Was this a cheeky tactic by our government? Of course. Did it work? Yes. Did we really have a major discussion about the implications for getting into a currency union and work out what domestic measures we would need to put in place such as bank liquidity ratios or law prohibiting 100% mortgages to protect ourselves from the flood of cheap credit that was about to enter the country? No, of course not. Sure we were busy working out how we were going to spend the £8 billion.



See we as a nation don’t have a very clear policy on our approach to the EU. The nearest we have is the Programme for Government which states that “we are determined to restore Ireland’s standing as a respected and influential member of the European Union” that includes achieving the EU2020 (the EU’s aspirational strategic document for the next ten years that maps out our targets for R&D and employment and the like) and increasing our role in Justice and Home Affairs (crime prevention and international legal co-operation). As short as that sounds, that is a hell of an improvement from the last Programme for Government which had a list of bulleted items about the EU that looked like someone had scrambled together five minutes before the document went to print.



So where is our Sikorsky speech on what the EU should do now, or our clear national policy on the EU like the Finns have?



We haven’t really worked our EU policy out. Instead, we spend a huge amount of time in Ireland asking, “Well what’s in it for us?” and then get really surprised when the cheque we get comes with political consequences like sharing political power. This approach then leads to some highly simplified, stock beliefs we have about Europe which need to be seriously questioned, as the fantastically bearded Jason O’Mahony has done very succinctly here.



One thing is for sure, our debate on Europe for this Treaty has to be more than tax, abortion and neutrality, mixed with a healthy fear of German and French dominance and some shouting about our ‘sovereignty’.



And with this comes a ban on scare mongering on both sides of this debate. Because for one, I’ve not seen one conscription letter since the passing of the Lisbon Treaty. Have you? Assumptions are going to be dangerous – which leads to my final point about this:



5. There’s going to be a shock at home if the EU democracy issue isn’t sorted

There’s an interesting trend that I’m starting to see – there’s quite a growing cohort of people who do still like the EU but whose patience is running thin about it all. In the last referendum a few worked on the Libertas campaign during the Lisbon Treaty, while others, through gritted teeth, voted for Lisbon. Just.



But this government, along with others in Europe, may be in for one almighty shock when they see people who they would have relied on and counted on for delivering another EU referendum, very vocally saying enough is enough and that they might not be supporting this Treaty.



And the reason might not be the obvious one – the fear of fiscal union – but rather another issue that needs to be tackled before needs to be properly addressed and head on. And that is the democratic implications that come with increasing powers of the EU.



It may mean a directly elected President of the EU – which as Jason O’Mahony has worked out here is not as crazy an idea as you may think – or some other solution. But this time around, it is going to take some serious imagination which needs to be put to solving this problem, rather than fudging a solution.







You can read more of Andrea Pappin’s views at www.plaintalking.ie



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