MICHAEL CLIFFORD: Apple tax ruling means a decision must be made

Apple's tax bill has divided the Irish political system

The ruling that Apple should pay to the State €13bn in back taxes means the Cabinet in now burdened with having to make a decision, a situation that sees the political system divided down the middle yet again, writes Michael Clifford

WHEREFORE the road less travelled? The ruling that Apple should be stumping up €13bn in back taxes to this state has opened for the Cabinet the dreaded burden of making a decision.

The Irish political system is once again divided down the middle. On the one side, the main parties are advocating the straight and narrow route over which successive administrations have cautiously tread for decades. Meanwhile, elements of the opposition want to crank up the speed and take the high road in the name of a better outcome for all citizens.

This time around, there is a third force on the scene, the Independent Alliance, the outsiders on the inside, frozen stiff like rabbits caught in headlights.

The decision to be taken by the members of the Independent Alliance on whether to appeal the EU ruling will have a major impact on the Government, possibly bringing it to an end.

Gene Fitzgerald TD shakes hands with Steve Jobs of Apple alongside Apple’s Mike Markkula in Cork in 1980.
Gene Fitzgerald TD shakes hands with Steve Jobs of Apple alongside Apple’s Mike Markkula in Cork in 1980.

Shane Ross, John Halligan, Finian McGrath, Sean Canney, and the Boxer Moran must decide whether to accompany the Government down the straight and narrow, or proclaim their wish to venture on the road less travelled, secure in the knowledge that they won’t have to undertake any bumpy ride. Then there is Katherine Zappone who beats her own path.

The choices before our elected representatives in this regard have a similar character to those in at least two other incidences since the economic collapse eight years ago.

In 2008, the Government of the day had a choice over the banks. Let Anglo collapse, sit back, and pray that contagion doesn’t kick in and prepare for the possible break down of social order in the event that it does. Or take a gamble and guarantee the banks, effectively propping them up until they can retake their place in the great corporate world.

Brian Cowen took the conservative option, gambling on the banks. That proved to be extremely costly for the citizens, but it’s next to impossible to know whether or not it was the wrong decision.

Three years later, the new Fine Gael/Labour government had the opportunity to burn the bondholders and relieve Irish citizens of some of the huge debt imposed on them. Michael Noonan was told “a bomb will go off in Dublin” if he ventured down that road.

He chose the conservative option, unsure of how powerful the bomb might be and whether it could blow his government out of office. Again, the wisdom of that decision will remain a great imponderable.

Apple chief executive Tim Cook: His company faces a €13bn bill for back taxes in Ireland.
Apple chief executive Tim Cook: His company faces a €13bn bill for back taxes in Ireland.

In both of those instances the opposition of the day largely opposed the straight and narrow. They preferred the road less travelled, the populist route, the way along which lay risk enticing the possibility of greater reward. Voicing preference for that road was also a great luxury as a decision would not have to be made to act on it.

Now, we’re back at the crossroad. Option one is to appeal the ruling, forego €13bn from an international corporate sector that has been getting away with murder on tax avoidance for decades.

Or, option two involves taking the money, spend it where it is much needed, and put it up to the Apples of this world that Ireland won’t be an easy touch from now on.

The case for taking the money was boosted yesterday when a spokesperson for the EU said that there would be no impediment from the union’s fiscal rules to prevent Ireland spending the money as it saw fit.

“The amounts that are recovered by a member state in a state aid investigation simply go back to the member state’s budget and they can then of course use it for their own decisions,” he said.

The Government’s resolution to appeal the awarding of this money was enunciated within hours of Tuesday’s ruling by Noonan. Surprisingly, this was done without consulting the constituent elements of the Government.

Michael Noonan
Michael Noonan

“I disagree profoundly with the commisison’s decision,” he said. “Our tax system is founded on the strict application of the law, as enacted by the Oireachtas, without exception.”

Fianna Fáil is onside on this one, as is the Labour Party. Opting for the other road, Richard Boyd Barrett accused the entire political establishment of “economic treason” by facilitating a sweetheart deal with Apple.

That accusation was first levelled in 2010 by the Labour leader Eamon Gilmore at Brian Cowen, and is as risable now as it was then. Differing opinions on how best to serve the country should not be reduced to base insults about motivation.

Boyd Barrett and his kindred spirits in the Anti-Austerity Alliance are consistent. They have constantly railed against the low corporation tax rate of 12.5% and a central plank of their politics is the overweening power of global companies. They want the money and they want it now.

Stuck in the middle are the likes of Sinn Féin, Social Democrats, and the Greens. All are demanding that we take the money, but would they hold a similar position if in government? All broadly agree with long standing policies on foreign direct investment, including the low corporation tax rate.

Those policies, in which tax certainty and international reputation feature prominently, largely inform Fine Gael’s decision to appeal.

Apple tax ruling means a decision must be made

The Independent Alliance members don’t have the luxury of the likes of Sinn Féin, the Social Democrats, and the Greens.

Instead, they must wrestle madly with their consciences, not to mention fight against any base political instincts.

After that there will be hours poring over the 130-page ruling in search of a chink of political cover.

Only then, emerging from those torturous internal battles, will they actually decide.

The outcome of their deliberations could have a profound impact on the political landscape, but irrespective of which road they take, it won’t be an easy ride.

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