Lough Erne G8 plan could spell trouble for Ireland’s corporate tax regime
Analysis: shortage of specific action plan means issue could be long-fingered
“For the Taoiseach it was an image to die for. There’s nothing a leader likes more than proximity to more powerful leaders.” US president Barack Obama, British prime minister David Cameron and Taoiseach Enda Kenny take a walk at the G8 summit at Lough Erne in Fermanagh. Photograph: Laura Hutton/Photocall Ireland
For the Taoiseach, it was an image to die for. There’s nothing a leader likes more than proximity to more powerful leaders.
For Northern Ireland the visit of the Group of Eight was something akin to the peace dividend on steroids, a resounding global endorsement of the 1998 settlement and the gradual transformation of its society.
In question now is whether the summit itself was a success on its own terms.
For Mr Kenny more pointedly, the question is whether the clampdown on aggressive avoidance heralds trouble for Ireland’s tax regime. Potentially it does, but down the line.
Cameron, host of the summit, can point to a measure of incremental progress on contentious tax questions, trade and the transparency agenda. However, significant further action is required to bring forward the really big manoeuvres.
Putin holds out
On the vexed question of Syria, global unity remains elusive. An isolated Vladimir Putin held out against a joint demand for Bashar al-Assad to relinquish power.
Similarly, Putin’s rejection of US claims that Assad has used chemical weapons against his own people led the G8 to condemn “any” use of such weapons. The G8’s strong support for a peace conference did not translate into a firm plan to bring the warring factions together.
There’s no such thing as overnight success in this game. The summit yielded the Lough Erne Declaration on tax, a 10-point plan which left out some key principles but included others which may yet cause difficulty for Dublin.
With the taxation debate increasingly cast as a moral question, moves by the G8 to prise more from the multinational sector were inevitable once Cameron put the question on the agenda for Britain’s rotating presidency of the group.
“The body battles against germs. The war is never won. It’s a continuous process of changing the locks,” said Paul Collier, the Oxford economics professor who advises Cameron on tax. “The changing of the locks has fallen behind the innovations of corporate lawyers and accountants.”
A nuanced picture emerges on tax. Absent, for example, is an explicit push for the public exposure of the egregious tax practices of big-name companies by compelling them to declare profit, revenues and tax payments country by country. As signals go, this is not without significance.
Instead, the leaders pledged in their communiqué to “work to create” a common template for multinationals to report to the tax authorities where they make their profits and pay their taxes.
No explicit measures
Absent too are explicit measures compelling secretive firms which obscure their ownership in offshore havens to sign up to an official central register. The latter had appeared to be within Cameron’s grasp and campaigners had pushed for automatic public disclosure of such a register.