Vittorio Bufacchi: Perils of Ireland's dependence on multinationals for tax revenue and employment

The State needs to adopt a different economic model if it doesn't want to excel in the disastrous policy of boom-and-bust cycle

The 18-to-23 age group is one of the most important but vulnerable groups in society and we must give them a worthwhile future which means a basic income for them. Picture: Denis Minihane

Ireland’s public finances are healthy, very healthy, disturbingly so. We have been there before. The risk the country is once again edging closer to the precipice must be taken seriously.

The problem is the Department of Finance’s myopic enthusiasm regarding a budget surplus of approximately €5.2bn recorded in 2022. 

The fact that tax revenues totalled €83.1bn, showing a 22% (€14.7bn) increase on the previous year, may seem like good news, but the devil is in the detail.

Corporation tax receipts amounted to €22.6b, up 48%. This is extremely worrying, considering that the bulk of corporate tax receipts come from only 10 multinational companies. 

Foreign multinationals account for more than 30% of employment and more than 50% of employment taxes of corporate employers, which basically means that today the Irish State is at the mercy of a handful of multinationals. 

It is both reckless and irresponsible not to adopt a different economic strategy. Now is the time to act.

This bumper year in public finances is an opportunity to begin the process of weaning the economy away from its dependence from multinationals. 

Failure to do so is to excel, once again, in the tried-and-tested disastrous policy of the boom-and-bust cycle.

Different economic models

There are two different economic models the government should consider going forward, which can be funded by the present tax intake.

The first policy is community wealth building. Grounded on egalitarian ideas of social justice, community wealth building ensures more of our economy is democratically and socially owned, shifting the emphasis from redistribution (taxation after wealth inequality is generated) to predistribution (the creation of fairer outcomes from the beginning).

Community wealth building is built around ‘anchor’ institutions: large non-profit institutions like universities and hospitals, that do not move location. 

Anchor institutions are the logical opposite of multinationals. The idea is to redesign core institutional relationships of the economy, especially at the local level. 

The key is to introduce democratic collective ownership of the local economy, including worker cooperatives, community land trusts, and public and community banking.

A key advantage of community wealth building is that it keeps money recirculating locally rather than extracting it. 

The estimate of the multiplier from buying local is eight, meaning that if you buy from a large multinational then that money leaves your community right away, but if you buy from a local business the money stays local and is spent a further eight times.

Community wealth building is not utopian, theoretical pie-in-the-sky. This radical economic model has been put in practice in different places globally, including in Cleveland, Ohio (USA), and Preston (UK), with extremely positive results. 

To apply this model in Ireland only requires vision and political will. It is ironic that the two global experts on community wealth building, Martin O’Neill in the UK and Joe Guinan in the USA, co-authors of The Case for Community Wealth Building (Polity 2020), are both Irish. 

Martin O’Neill will be visiting Cork in March, and will be speaking at the 72nd Labour Party National Conference, March 24–26th 2023, at the Clayton Silver Springs Hotel.

The second policy is an unconditional, but not universal, basic income. The idea behind basic income is to provide a regular cash payment to members of a political community on an individual basis, without means test or work test. 

Funded by an increase in taxation, this policy would target only a specific age group: 18– to 23-year-olds.

Objections to basic income policies

There are three standard objections to universal basic income policies.

First, since basic income is not means tested, the unconditional and universal nature of the payment is unjust, rewarding the rich as well as the poor. 

Second, affording payments to all members of the community from the public purse is simply too expensive. Some economists argue that tax revenue would have to be doubled to pay for Basic Income, which makes Basic Income unaffordable. 

Thirdly, because basic Income is extremely expensive, it contributes to inflationary pressures, which is the last thing our economy needs rights now.

Even if we accept the validity of these objections, and it is a big ‘if’, the problem can be fixed by limiting the scope of the policy. 

Restricting basic income exclusively to those in the 18-23 age group will take care of these concerns.

The State should treat all its adult citizens as individuals, not as members of a family, and most young adults are not financially independent. 

Basic income would mean being able to choose a certain training course, or follow one’s artistic impulses, or learn a language, or study a certain subject at university, without needing the consent of a parent or guardian. 

That explains why the title of the most famous book on basic income, by Belgian philosopher and economist Philippe Van Parijs, is Real Freedom For All (1997). 

The basic income policy being proposed here applies only to 18- to 23-year-olds, covering a small segment of the population, therefore it is not too expensive, and it will not add disproportionally to inflationary pressures.

The 18-23 age group is one of the most important but vulnerable groups in society. 

Basic income policy is affordable

There are approximately 350,000 people between the ages of 18 and 23 in Ireland: if basic income for this group was set at €800 per person per month, this policy would cost €9,600 per person per year, or €3.4bn per year. It is affordable.

Targeting this age group for basic income means giving all young adults in Ireland an opportunity to be independent and shape their own future. 

It would send a message to Ireland’s young adults: We trust you, we value you, we want to invest in you and in your future.

In the last few days Amazon has announced that they are to cut more than 18,000 jobs globally. Amazon currently employs 5,000 workers in Ireland. 

For a small country like Ireland, losing these jobs would be disastrous, but we have no control over what the Jeff Bezoses of this world decide is best for their shareholders. 

This is why Ireland’s love story with multinationals needs to come to an end: it was wild, it was fun, but this relationship will always be profoundly unstable, potentially deleterious, and possibly even insalubrious. 

Ireland will never be a fair society for as long as its economic base is controlled by foreign billionaires.

• Dr Vittorio Bufacchi is Senior Lecturer in Philosophy at University College Cork, and author of Everything Must Change: Philosophical Lessons from Lockdown (Manchester University Press, 2021)