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Domestic political point-scoring cannot distract our Government from fighting Apple tax ruling


Cartoonist: Ken Lee

Cartoonist: Ken Lee

Cartoonist: Ken Lee

Urban legend has long suggested that the logo on the back of your iPhone is a tribute to Alan Turing, the cryptanalyst who laid the foundations for the modern-day computer.

He was also the man who pioneered research and techniques that unlocked German wartime codes through the Enigma machine.

Official Ireland will require a codebreaking device of its own to decipher the economic and political ramifications of yesterday's ruling by the European Commission on Ireland's taxation relationship with Apple. The technology giant was directed to pay Ireland €13bn by the end of the year for what the EU view as unpaid taxation.

In this war of attrition between Ireland, Apple, and the European Commission, the Irish State has received a winter windfall our Government doesn't really want. On the face of it, receiving an unexpected bonanza worth billions must be a good thing, right?

Wrong! As a small open economy operating on the margins of Europe, Ireland needs something special if it is to attract investment. Until now, providing attractive and competitive tax regimes, coupled with a well-educated workforce, has been our draw. However, Europe has never been happy with our unique selling point when it comes to taxation, and yesterday the Commission commenced an onslaught in earnest.

Dressed up as a competition issue, make no mistake, this row is not about taxation or even competition. It is all about national sovereignty and international power. When the Euro was established, the hope was that the common currency would create political solidarity that could further foster European democracy. This simply has not happened. For quite some time, it has been obvious that there are those at the centre of bureaucracy in Brussels whose modus vivendi is a federalised Europe.

Britain's recent vote to exit from the EU has handed them the equivalent of a political power tool in terms of advancing their cause. Imbued with a new sense of purpose, this power struggle is about continents not countries.

The federalists of Europe are on one side and the free-marketeers of the USA on the other. Ireland are stuck mid-Atlantic and about to get bounced around on some very rough seas as the issue is fought out in European Court of Justice.

The only thing absolutely guaranteed at this juncture, on foot of yesterday's ruling, is a lot more wonga for the wigs as all sides lawyer up with gusto.

Ignoring that fiscal retrospection as a fundamental 'no-go area' for the application of taxation rules has been thrown into disarray; the more pressing issue for us is that with this one simple ruling, a multiplicity of relationships have changed fundamentally for Ireland.

Most critically, our relationship with existing multinationals based in Ireland is affected. Beyond that, Ireland's reputation abroad as a place to do business is damaged. Our relationship with the European Community is changed. If all that wasn't enough, we are still dealing with the implications of Brexit. We can only watch on as our nearest trading partners, the UK, dash to reduce their corporation tax rate. Already at 16pc, their approach is - how low do we need to go to compete with Ireland?

Converging international forces have once again conspired against the Irish Government. On top of all that, our domestic political situation is fragile and complicated.

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Challenging Government for the sake of it has become the low barometer benchmark against which some set their political stall. Expect a litany of lists from some political quarters in the weeks ahead detailing the very laudable ways to spend this money.

Should domestic political point-scoring engulf the Government's tactics on this issue, we are in acute danger of throwing the baby out with the bathwater. The exchequer may well pick up €13bn to write off our national debt. But what of household debt? Tell it to the man behind the counter in the local shop who loses his job if Apple decides to shut down its operations in Cork.

Charges of 'international reputational damage' and labels like 'tax haven' will do nothing to diminish the practicalities of the implications of this ruling. The contribution of multinational companies to the Irish economy is immense. Outside of the financial services sector, there are about one thousand US companies with operations in Ireland who provide jobs to over 100,000 people directly. The €6bn this provides in wages to Irish employees is only half the story. Other taxes such as VAT, indirect expenditure on security, logistics, catering, cleaning, agency workers and peripheral businesses are harder to quantify, and may only be realised when it's too late. I would take a tax haven over an unemployed workforce every day of the week.

Thirteen; the number that has long been connected with misfortune was dealt to Ireland yesterday. By the end of the year, Apple will have to write a cheque for billions that no one wants to cash. Minister Michael Noonan will sit at today's Cabinet meeting, arms folded and livid as he attempts to convince his colleagues that the Government has to appeal this decision and fight until the death.

For now, all short-term political game playing needs to be suspended or ignored. In terms of fighting this one, we need a Government who are battle-ready, not battle-worn.

A Government who will not be distracted by domestic political posturing.

As we enter these uncharted waters, the Government might well take their tactical advice from our Olympian O'Donovan's from Skibbereen: "Close your eyes and pull like a dog."