Corporations must accept that a fair share of profits is the right price to pay

Corporations must accept that a fair share of profits is the right price to pay

“I like to pay taxes. With them, I buy civilisation.” — Oliver Wendell Holmes Jr.

TO the two life certainties — death and taxes — it’s surely now time to add another: arguments about the fairness or otherwise of tax regimes as applied to international corporations by governments ... including our own.

This week began with an Oxfam study flagging up Ireland as one of four European Union countries that would be classified as a tax haven if Brussels was to apply its own yardsticks to member states. The other three were Luxembourg, the Netherlands and Malta. 

The EU is working on a tax haven blacklist, premised on criteria including tax transparency and practices that allow corporations to move profits to low or tax-free jurisdictions. 

Since none of the 92 states being assessed are EU members, it’s safe to assume that commission president (and a former prime minister of Luxembourg) M. Juncker will declare the union free of tax havens, even though Britain — still a member state — has overseas territories in which tourism is not the only major industry.

And as the week draws to a close, the Dáil’s Public Accounts Committee is told by the Comptroller and Auditor General that eight of the 100 highest earning Irish-based multinationals are paying no corporation tax; five have a tax bill of less than 1%; some are exploiting gaps in the tax system and pocketing rebates from the Revenue; and Apple is being tardy in coughing up the €13.1bn it owes. 

To all of which, the Revenue’s chairman replies, presumably with as straight a face as humanly possible: “I don’t believe Ireland is a tax haven.” We know France’s president Macron suspects it is, and that his solution — albeit a non-starter —is a standard, EU-wide corporate tax band that would curb the ease with which companies such as Apple, Amazon and Google can wriggle their way through and around jurisdictions.

It would be spectacularly simplistic to suggest that there is one or another straightforward, uncomplicated fix. 

The aftermath of the 2008 crash continue to disfigure the economies in the western world, where governments are desperate, and rightly so, to attract companies that will generate direct and indirect employment. Tax credits and reliefs for research and development costs can do that, even though that can lead the way to the automation that might destroy as many workaday, tax-paying jobs as it creates. Hand-wringing politicians will waffle on about fairness and corporate responsibility, but they are reluctant to risk deterring foreign investment.

The multinationals need the infrastructure only governments can provide, but when states attempt — as Ireland did in 2014 — to close some tax loopholes, there any number of welcoming, very business-friendly jurisdictions to which their profits can be moved. 

We have the publication of the Paradise Papers to thank for telling us that Apple moved two of its subsidiaries from Ireland to Jersey, an autonomous UK dependency on which the only EU rules that apply are those of its customs union.

It might be too much to ask or expect, but what’s needed is an acceptance by the world’s mega-corporations that a fair share of their profits is the right price to pay for the civilisation on which their prosperity is built.

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