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Fintan O’Toole: Ireland makes a fetish of corporation tax because it is too scared to be normal

By making the 12.5% corporate tax rate the test of our sovereignty, the State sends out a message of fear to the world

A shrieking fire alarm went off the other night in the apartment block where we’re staying. In the seconds between waking and running, we had to think: what do we save? Without time for conscious thought we instinctively grabbed our passports. If everything else was lost we’d still have proof of who we are.

What would Ireland snatch intuitively when the fire alarm goes off? We don’t really have to speculate. We’ve been there and done it.

To replay that moment here is the opening paragraph of a perplexed report from Dublin in the New York Times, dated November 25th, 2010: “Cut Ireland’s minimum wage? Check. Collect more in property taxes from beleaguered homeowners? Check. Raise the corporate tax rate, which could plug the gaping hole in Ireland’s tattered balance sheets even faster? Well, no.”

I strongly suspect that the last sentence originally read “hell, no” until a print editor got to work. But the point is clear enough. In the meltdown of the Celtic Tiger the instinct of official Ireland was to save one possession, quite literally at all costs: the 12.5 per cent corporate tax rate.

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In that panic-stricken period, when we got such an awful awakening from our dreamy delusions of grandeur, everything was dispensable. Except for the thing that somehow proved to a State that had lost its sovereignty that it still existed: three digits and a decimal point.

Moments of great stress are moments of truth. The truth thus revealed was the State had just one irreducible marker of its own existence, the sacred number of the tax rate

Its own misgovernment had made Ireland a supplicant. The troika was moving in to take charge. There was no humiliation that could not be accepted and no pain that could not be inflicted.

What followed was as foolish as it was cruel – an austerity programme that prolonged and deepened an economic crisis. A few of us said this at the time, but it is now the established orthodoxy. Last week the EU's economy commissioner, Paolo Gentiloni, told The Irish Times that it was all "a mistake".

Big mistake

But in 2010, instead of resistance to the big mistake, the State, before taking flight from its own sovereignty, gripped its passport: 12.5 per cent.

This is who we are. You can take away everything else. But this? Hell, no. Those three digits were the tricolour under which the State rallied for its last stand of independent dignity.

Moments of great stress are moments of truth. The truth thus revealed was that the State had just one irreducible marker of its own existence, the sacred number of the tax rate.

This pathology conforms to the Oxford dictionary definition of fetishism: “A form of… behaviour, often resulting from earlier repression, in which desire is stimulated by, or has as its goal, some kind of inanimate object.”

The fetishization of 12.5 per cent is indeed a result of earlier repression: the long, slow torment of underdevelopment and mass emigration. The number came to represent change, growth, Ireland’s gradual integration into western normality.

But – and this is the contradiction – it also represented the terror that this process might be temporary and reversible. It put into a numerical formula the profound anxiety that comes with Ireland’s peculiar process of development.

When modernity is something you attract from the outside (like the 800 US-based companies that are so crucial to our economy), you are haunted by fear that what has landed from afar may at any moment take off again.

There is an Irish exceptionalism that is the opposite of the British version. Britain can’t be normal because it thinks of itself as too great to be ordinary. Ireland can’t be normal because at some deep level it thinks of itself as not good enough.

Inferiority complex

The big problem with this inferiority complex is that it has some basis in truth. The State really is not good enough to sustain a top class global economy. Investment in education, basic infrastructure like housing, healthcare, energy, public transport, sewerage and water, support for cultural creativity and innovation – none of it remotely good enough.

The State's desperate hanging on to 12.5 per cent is perceived in the rest of the world not as a statement of sovereignty but as a distress signal. It radiates fear

But we’ve allowed this to become a feedback loop. We fetishize corporate tax because we don’t believe we’re attractive enough without it. Yet we don’t do the things that would make us sustainably attractive because we have made a fetish of 12.5 per cent as the only thing that really matters.

The tax rate is a prosthetic enhancement Ireland thinks it needs because it does not trust its own face in the mirror. We keep fluttering the false eyelashes of very low tax to pretend that we’re still a young and delicate State.

But we’re not the ingenue of the global economy anymore. We can’t rely on the kindness of strangers to exempt poor little us from the duties of international citizenship because we are so exceptionally fragile.

The State’s desperate hanging on to 12.5 per cent is perceived in the rest of the world not as a statement of sovereignty but as a distress signal. It radiates fear. It presents Ireland as a place that hugs its numerical security blanket because it is too scared to be a grown up, normal country.

The dream of Irish patriots was always that their homeland would “take its place among the nations of the earth”. Why, now that we can, are we so afraid of doing exactly that?