Sir, - David McWilliams tells an important story about Norwegian wisdom and British ideologically-driven foolhardiness (“Norway the clear economic winners after England’s own goal with North Sea oil,” July 11th). In telling this story, he attempts to extend the lesson to include Ireland.
But, while all are examples of the generation of economic rents (or surpluses in excess of the economic costs of production) and should be accumulated and employed in the public interest, the “multinational tax windfall” is very different from the economic rents generated by the exploitation of hydrocarbon resources.
These are not generated by a gap between market prices and the economic costs of production. They are generated, in the main, by tax arbitrage between the US and Irish tax regimes. Both are determined and influenced by internal and external political factors that are separate from the underlying economic activities.
However, that doesn’t stop Irish governing politicians and officials from claiming that the additional corporation tax receipts are generated solely by genuine economic activity, because it is difficult to quantify precisely how much is related to tax arbitrage and how much is related to changes in underlying economic activity.
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But the fundamental point remains that as much of these “windfall gains” as could be quantified objectively should have been allocated to a wealth (or future provisions) fund and not included in the current or projected fiscal balance.
The belated and paltry allocations to such funds do not exonerate the current and previous governments from the failure to do so since the National Pensions Reserve Fund got swallowed up. – Yours, etc,
PAUL HUNT,
West Sussex,
England.
