Apple verdict a victory for Ireland Inc but politically poisonous

Government celebrates, but simplistic notion State passed up €13bn lingers among voters

Minister for Finance Paschal Donohoe finally has some substantial bullets to shoot back at the Republic’s critics. Photograph: Julien Behal/PA Wire

Minister for Finance Paschal Donohoe finally has some substantial bullets to shoot back at the Republic’s critics. Photograph: Julien Behal/PA Wire

 

The European Commission’s finding in 2016 that Ireland was owed €13.1 billion in back taxes by Apple was a hammer blow to Ireland’s reputation. In the eyes of its many detractors, the ruling was proof positive that Ireland – perennially on the international bold step for its facilitation of tax planning – was deserving of its reputation as public enemy number one.

It was a third major political and economic shock for Ireland that year, along with the Brexit vote and the election of Donald Trump. It signalled that an order that rested on the free flow of people, money and services, and that Ireland had done so well out of, was destabilising.

However, it was also a lightning rod domestically. The ruling didn’t just play out in Government Buildings, Brussels or Cupertino. When tens of thousands of people marched against water charges in Dublin that September, they brought with them an enormous inflatable apple, emblazoned with “13 billion”.

The ruling, and Ireland’s subsequent and inevitable decision to appeal it, crystallised the idea for many people that the government was not “for them” but was more interested in safeguarding the financial interests of giant corporations.

In the four years since, the case has become a touchstone for the opposition, particularly for those on the hard left. The €13 billion – as well as millions in fees for investment bankers to sequester it in an escrow account, and further millions on legal fees – was invoked every time the government pleaded that it could not afford something.

Nurses’ wages, investment in housing, crumbling urban infrastructure – all could be paid for using this €13 billion. Many of these arguments were simplistic, but that was the point. It became a simple, tangible code for the idea that the State prioritised corporations over people.

War rages on

The finding by the General Court of the European Union, which may yet be appealed, will be welcome for the Government on many fronts.

While it may usher in a variety of awkward policy interventions from Brussels, eager to reassert primacy in the battle over multinational tax, the immediate battle has been won, though the war rages on. The new Government continues to lurch between crises, but there was also a risk that Green Party grassroots members would rebel against another appeal, were one needed. Speaking after the ruling on Wednesday, Green Party finance spokeswoman Neasa Hourigan described it as “a considerable blow for the EU commission, the move towards tax reform and ensuring that large multinational companies pay a fair amount of tax”. Following the fractious vote on the programme for government, Hourigan is far from the centre of power in that party, but she enjoys considerable support. Watching the Green Party wrestle with its conscience is something Fine Gael and Fianna Fáil will be pleased to avoid.

The State will also be pleased, at least in the short term, that it finally has some substantial bullets to shoot back at its critics. Ireland, and Paschal Donohoe in particular, have pushed through some meaningful reforms in recent years aimed at improving transparency. A large, Apple-shaped cloud has often obscured these efforts, and it rankles with those on Merrion Street. That much was clear when Donohoe addressed the media on Wednesday.

“On countless occasions I’ve outlined changes that we’ve made, and the agenda of change that Ireland has implemented has gained little traction in comparison to the criticisms of us that have been made at different times,” he said.

“Much of the criticism levied at Ireland in relation to how we have handled the taxation matter has been given a very comprehensive answer today.”

However, despite the victory on these two fronts, the totemic value of the issue to the Opposition has not been lost. While the ruling will have been celebrated in Merrion Street and in many Docklands offices, that simple notion that Ireland has actively sought to pass up €13 billion still resonates.

The political dimension of this, and how the State’s strategies are perceived by certain groups of voters, is inescapable. The Covid-19 pandemic is likely to further sharpen divisions in Irish society between those who have, and those who do not; before the Covid-19 crisis, there was the housing crisis, and the health crisis, and the generational wealth divide. For many, victory for Ireland Inc is very different to a victory for Ireland, and the Government would do well to remember this.

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