Latest posts by Alex Mitchell (see all)
- Brexit Meltdown or Grand Plan? - 2 September, 2019
- The top 10 of Eurovision 2019: the good, the bad and the fugly - 17 May, 2019
- Melodifestivalen 2019 - 9 March, 2019
The European Commission concluded a three-year investigation into the tax deal agreed between the Irish Government and tech giant Apple. The commission argues the Irish government enabled Apple to pay significantly less than other companies through taxation – a deal that effectively set Apple’s tax bill at no more than 1% and as little as 0.005% in recent years. This compared to the 12.5% rate for businesses in Ireland.
EU member states can’t set selective tax rates for individual companies. This move has been branded illegal by the EU and it has suggested that Ireland can claim back €13bn in unpaid taxes.
You’d think the Irish Government would jump at this. Instead they are siding with Apple. Finance Minister Michael Noonan said in a statement, ‘The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system, to provide tax certainty to businesses and to challenge the encroachment of EU rules into sovereign member state competence of taxation.’
This is why people dislike multinationals. Especially when they are in bed with governments. €13bn is the cost of Ireland’s healthcare budget. It is also the amount of tax the Irish government allowed Apple to dodge during a period where Ireland had to seek an economic bailout from the EU after the Global Financial Crash of 2008.
Now both Apple and the Irish government will seek to appeal the ruling by the EU, both arguing that allowing companies not to pay their fair share is good for the economy and good for business. If Ireland are ‘forced’ to impose this then it will ‘hurt investment’. The US Treasury is now involved, stating that the EU was in danger of becoming a ‘supranational tax authority’, adding the latest ruling could ‘undermine foreign investment and the important spirit of economic partnership between the US and the EU’.
This isn’t an isolated case. Last year the Commission told the Netherlands they could recover €30m from Starbucks, whilst Luxembourg were told to claim back a similar amount from Fiat.
I welcome the EU’s decision. All EU countries should stand together to denounce tax avoidance. It’s not fair that multinationals pay less than 1% in tax while citizens in the same countries pay 20% or more on income and consumers pay VAT on the products those multinationals sell. Likewise, while vital start-ups and SMEs pay their share in taxes, multinationals squeeze their margins with their significant advantage – so much so that 1 in 3 start-ups will fail. If you want to trade here, be based here and employ people here. Multinationals, like their employees, must pay their fair share. If multinationals pay their taxes, we can then look at reducing taxes for everyone and not just the 1%. Equally, if we decide the public sector needs funding (especially after the 2008 crash) then that is the government’s decision to make and uphold.
A government is there to serve and protect its citizens. It is not there to serve multinationals’ balance sheets. Yes, multinationals provide jobs and income which ultimately gets fed back into the economy through spending and taxation of consumers, but when a multinational has a tax rate of less than 1% while someone who is on what the government deems a living wage is taxed 23% on income and 23% on VAT (Ireland’s VAT rate), and then has national insurance to pay, the government is not defending its citizens from exploitation. This isn’t something that applies just to multinationals – I made similar comments in an article on the Mossack Fonseca leak.
I strongly dislike the notion of ‘trickle down’ economics, where the wealthy become more wealthy in the hope that the wealth will filter down to those less fortunate. It might work . . . but only if organisations and individuals pay their fair share of taxes. That is how it’s supposed to work. Yet, as it currently stands, those at the bottom aren’t getting their fair share because those at the top are hoarding their money.
I am horrified that the Irish government is defending this deal with Apple and I hope they will reconsider. I hope that other EU nations stand up to big business and force their hand. I just wish that companies like Apple had the financial conscience to accept that they owe a duty to the countries they trade in – to pay their taxes and their fair share rather than making a mockery of sovereign tax laws.