G8 Summit - Tax agenda ominous for Ireland

Symbolically, two faces of Ireland, one positive the other negative, were reflected in yesterday’s historic visit of President Barack Obama to Belfast and the opening of the G8 summit in Co Fermanagh.

The return of America’s First Family to these shores had a warm glow about it. Setting the tone, President Obama’s message to the people of Northern Ireland was upbeat and positive. A wordsmith of great skill, he wove a rich tapestry of the symbolism of peace, recalling how it has improved their lives.

In a powerful address delivered to thousands of students, he emphasised that peace had transformed society in the North, reminding young people from across the political and religious divide that the clenched fist had given way to the open hand, that Ireland was now chic, that young people could travel without encountering roadblocks or soldiers, and that you could befriend or fall in love with whoever you want. But he also warned that divisions still exist, pointing out, for instance, that Catholics and Protestants still had their own schools.

The irony of his peace address was not lost on protesters who staged an anti-G8 demonstration in Enniskillen. Many accuse President Obama of waging terrorism by sending drones to assassinate terrorists in the Middle East, a strategy justified by America which claims that while innocent bystanders may be killed, US citizens and Europeans are safeguarded.

Meanwhile, Michelle Obama with daughters Malia and Sasha travelled to Dublin to explore the rich heritage of Trinity College, enjoy the magic of Riverdance, and meet relatives. A close family visit with a decidedly happy ring to it.

On the shores of Lough Erne, however, the background noise is negative. In the long run, the consequences of the two-day meeting involving eight of the world’s 11 wealthiest countries — US, Russia, Japan, Britain, Germany, France, Italy and Canada — could prove ominous for Ireland despite the presence of Taoiseach Enda Kenny as president of the EU.

Issues of immense sensitivity, including the war in Syria, are on the table. But the summit is also expected to trigger a process of global tax reform which could ultimately cost this country many jobs by diminishing our attractiveness as an industrial location. The problem is a growing perception of Ireland as a tax haven. With the focus on tax, trade and transparency, the spotlight will inevitably turn on Ireland, indirectly if not directly. Like it or not, storm clouds are gathering over the so-called ‘double Irish’, not a drink but a mechanism used by hi-tech companies such as Google and Apple to avoid paying tax on vast profits.

Despite strenuous denials by the Irish Government, and regardless of whether or not it is wrong to describe Ireland as a convenient tax-avoidance channel, that’s the perception in America, Britain and elsewhere in Europe. Ever since he was first elected, the non-payment of taxes by US companies abroad has been a bugbear for President Obama. British Prime Minister David Cameron wants a G8 agreement on sharing tax information so that companies and individuals can no longer hide cash in offshore bolt-holes.

If nothing else, the G8 summit should bring home to the Government the folly of Ireland investing to an excessive degree in job creation by foreign companies which can leave at the stroke of a pen.