Back in 2009 Britain’s Liberal Democrat spokesman Matthew Oakeshott described Dublin as “Liechtenstein on the Liffey”.
He did so in response to the number of UK companies allegedly using the city as a gateway to offshore tax havens.
There then followed a series of allegations from the UK and the US that Ireland was not just a conduit for tax havens but one itself, culminating last December in the charity Oxfam comparing us with Bermuda and the Cayman Islands when it comes to helping big business dodge billions in tax.
Jim Clarken, chief executive of the agency’s Irish operation, said Ireland was part of a global system that services the super-rich while ordinary people lose out on essential public services as a result.
Ireland has endured a lot of flak in the past decade, particularly over the so-called double Irish, a tax strategy that some multinational corporations used to lower their corporate tax liability. There is little doubt that we have facilitated large-scale corporate tax avoidance through profit-shifting, sweetheart deals and encouraging shell companies. But Ireland is nowhere near being a leading gateway for offshore tax havens.
In fact, almost 40% of global corporate investments channelled into tax havens go through the UK or the Netherlands, according to a study by researchers at the University of Amsterdam. They concluded that the Netherlands is the biggest conduit to offshore tax havens in the world, showing that 23% of corporate investments there ended up offshore. The UK accounted for 14%, Switzerland 6%, Singapore 2%, and Ireland 1%.
That is still one percentage point too many and Mr Clarken is right when he suggests that closing down tax loopholes for the fabulously wealthy would increase the domestic tax take in Ireland and help us better fund essential services like health and education.
In order to halt or at least reduce the estimated €200bn in taxes that multinationals avoid paying in the EU using tax havens, the European Commission has just issued draft legislation that would force intermediaries to reveal details of cross-border financial schemes. The trouble with that is it will not apply to Britain after it leaves the EU — the fact the UK is already channelling so much offshore could give British negotiators leverage in securing a soft Brexit.
Nonetheless there is a strong moral as well as financial argument for taking a more forceful approach to tax avoidance here. Ireland’s wealthiest people do not pay enough taxes here. There is no reason why billionaires should pay less taxes than their staff. It is simply unconscionable. While Ireland should always remain open for business and wealth creation it is up to our political leaders to ensure equity and equality. The business of business is business but the business of government is welfare.
We may not be able to influence what the British will do but we can at least clean up our own act. In a hard-Brexit world, London could become the “Liechtenstein on the Thames”.
It doesn’t have the same ring to it, though.
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