Noel Whelan: Turning our back on €13bn would be politically explosive

A frank and honest communication of the case for an appeal is needed but unlikely

European Competition Commissioner Margrethe Vestager rejects Apple's criticism that an EU order to the company to pay back taxes to Ireland is political, noting the calculations are based on facts and Apple's own data. Video: REUTERS

 

The implications of the European Commission’s decision this week are truly massive. Size does matter and the size of the bill for back tax which the commission says Apple owes Ireland really matters.

The events of this week have damaged our reputation internationally. Some, but only some, of that damage could be repaired if ultimately Ireland and Apple win an appeal to the European courts. If we lose that appeal, the damage will be compounded.

The events of this week have also badly damaged our relationship with the European Union. Ireland is now engaged in public conflict with the European Commission on a central and important policy issue. It is not in our interest to be in that unhappy position in the lead-in to Brexit negotiations when we are trying to persuade European institutions to have particular regard to Ireland’s future.

The events of this week will have their most dramatic impact, however, on our fragile domestic politics. This is the biggest challenge for Irish politics in many years. It is a more potent one than water charges, and the political ramifications could be even more dramatic. The political response could further erode confidence and trust not only in the current Government but also in politics generally.

Popular impact

It is difficult to understate the popular impact of that big €13 billion figure. The suggestion that Ireland should abandon a claim, even to some of this sum, comes at a time when things are already precarious for our politics. It comes after the banks were bailed out, with the electorate still in a post-traumatic state after years of recession. It follows on from stories about vulture funds feeding off our property collapse but then paying little or no tax on massive profits.

The claim that the Irish people are owed €13 billion plus interest from Apple is not some ideologically motivated charge from the left-wing fringes of the Dáil or the European Parliament. It has come from the mouth of the European Commission itself. On this issue the European establishment is making the anti-establishment argument in Irish politics.

There may well be good reasons why Ireland should appeal against this decision. Ministers argue that failing to do so would be an admission that Irish tax authorities and the Irish State did something wrong. They say we can’t afford to alienate multinational corporations who provided hundreds of thousands of jobs in Ireland.

They must also realise, however, that there are profound political implications of abandoning a claim to such a substantial tax payment from a multinational.

The only way in which the explosive political impact of abandoning a claim to these billions could possibly be ameliorated is through honest and frank communication of the case for an appeal. Ministers need to set out in detail why it is in Ireland’s interest to forgo this €13 billion in the longer-term interest of sustaining foreign direct investment.

They need to tell us whether other multinationals benefited or continue to benefit from similar tax arrangements. They need to tell us what changes have already been introduced in how Apple and other such companies are treated. They need to set out honestly what the prospects for success in such an appeal are. They are unlikely to do so.

Anti-European rhetoric

Bombast from business executives does not advance the political case. Tim Cook’s claim that the European Commission’s findings are “total political crap” and Michael O’Leary’s suggestion that Ireland should tell the commission to “f*** off” are not helping. Stooping to the level of anti-European rhetoric more usually associated with the Daily Mail (or one time with Boris Johnson) does little to improve public understanding of the issue.

Government politicians, industry representatives and Revenue spokespeople now responsible for persuading the Irish people on this issue are closeted in groupthink. They are advised by those whose previous policy decisions have been challenged by the commission. They don’t appreciate the bubbling public anger at the notion of abandoning this tax claim.

Irish sovereignty

They are also seeking to crudely stoke up the suggestion that the European Union is infringing on Irish sovereignty. They fail to appreciate that most Irish people have a problem with the notion that Ireland used its sovereign tax-collecting powers to make or tolerate an arrangement which enabled one of the wealthiest companies in the world to evade paying tax on so much of its earnings.

In the next 24 hours the focus will be on the immediate implications for the survival of the Government. This Government always looked vulnerable to an unforeseen shock. We will know later today whether the Cabinet can collectively make a decision to appeal against this tax ruling. My guess is that it will not.

The next election, whether it happens sooner or later, will be all the more volatile because of this week’s events.

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