Cantillon: Schäuble finding tax issues rather taxing

Wolfgang Schäuble’s humour, dry as a white wine from his Baden homeland, was on display in his first speech to the Bundestag since returning as German finance minister.

Schäuble told MPs in Berlin he had read somewhere how, with the euro crisis now more in the past than the present, he faced a severe danger of boredom in his second term. “This is not a concern I have at the moment,” he sniffed, launching into a dizzying rundown of his to-do list for the next four years.

For Irish ears, his decision to dwell on tax affairs was most interesting. For years the “fiscal games” have been a reliable source of entertainment for journalists in Dublin and Berlin.

German politicians, usually of the junior variety, swing their club against Ireland’s corporate tax rate, prompting howls of protest and pain from the Dublin establishment. Ireland’s tax competence – in particular control of the corporate tax rate – will not be handed to Brussels.

Wasn’t it for fiscal sovereignty, after all, that the wild geese fled?

But that’s not why tax affairs are taxing Schäuble. The 71-year-old has been in the game too long to think Ireland is going to allow a transfer of fiscal competences to Brussels. The political appetite for a move like that is as low in Berlin as in Dublin.

But, he said, Europe still needed to strike the “right balance” between EU solidarity with countries in crisis and the national right to set taxes and drive competition. Europe, he said, had to “agree the most efficient way of using our limited means”.

With that he reopened the question of whether Europe can afford, financially or morally, to allow globalised corporations to take advantage of fiscal arrangements – as legal as they are dubious – to reduce their tax bills to a point where they do not exist.

This issue of tax fairness is also taxing Schäuble’s tax specialists. No one in Berlin really expects to see tax competence shifted to Brussels, so Ireland’s corporate tax rate remains an Irish affair. But no one – particularly in Dublin – should underestimate Berlin’s interest in consigning the so-called “double Irish” to the fiscal history books.