IT IS FASCINATING to watch left wing ideologues and simple minded idiots (though I repeat myself) gleefully call for the Irish nation to douse itself in petrol and light a match where corporate taxation is concerned.
“It is simply unfair,” they will shout time and again, “that these big corporations use our little country to reduce their tax liabilities when the ordinary Irish worker is struggling with water/property/income/taxes in general.”
As in all aspects of life, these folks seem to believe that someone else owes them a living. Just as those who are more successful than them should be paying 90% income tax rates according to the manifestos of many of our left wing parties, the corporations present in Ireland should be forking over far more of the global profits they wash through Ireland because, well, they have the money the lefties want.
Sorry, because fairness. What they seem to miss is causation. Yes, there are a multitude of corporations sitting in Ireland, employing hundreds of thousands directly and indirectly, but only having a small portion of their profits pass through as taxable in this state.
The reason they are in Ireland
That, in a nutshell, is why they are in Ireland. It’s not the only reason, but it is the seed, the germ, the zygote brought together by tax planning and our position in the world.
The left wing ideologues like to portray Ireland as a minnow, cowering in the corner and responding to every demand of big American corporations like a good colonial servant. They prefer not to think of us for what we are: A clever, cut-throat player in the globalised world of capitalism.
Little old Ireland has creamed prosperity off the top of the tax it has saved many corporations through an intentional strategy of competing for business and touting tax at the top of the agenda when the doors are closed in pitch meetings.
Anyone in our political sphere who proposes to jeopardise this arrangement from within is an economic saboteur. They are suffering from either self delusion as to the cause and effect of Irish prosperity or self loathing at our success in playing the globalisation game.
Should their policies around unilateral tax grabs, which ignore international tax treaties and the globally coordinated efforts at tax harmonisation that Ireland is participating in, come to fruition then this country will see jobs and future investments flee.
With that flight we will lose skilled workers and further erode our ability to compete with our own indigenous industries, which today spin off and feed from the global investors to this country.
We possibly all remember the response of Ruth Coppinger TD when it was put to her that the left’s tax policies might see companies like Dell further flee Ireland. Well, she responded without missing a beat, we’d nationalise Dell. There you have it, folks. We’d nationalise Dell and Google and Facebook.
Well, their Irish operations. I don’t know what we’d do if the tech companies simply cut off our access to their intellectual property and servers. Or where we’d get the parts that Dell Ireland would need to sustain itself.
And I suppose we’d need to stop their workers, managers and executives leaving the country. Some sort of strict border controls would be needed, particularly for the north. Some sort of a wall, maybe.
Ireland’s economy
Ireland’s economy without globalisation cannot sustain our population. We know this: During the de Valera era of economic nationalism and protectionism, we saw substantial emigration that makes our current bout since the recession began look paltry. When we opened ourselves up we saw prosperity wash over the country, and after our property-fuelled crash we have sprung back as the fastest growing economy in Europe.
Without being an open and global player, we are nothing. We have tourism and agriculture, but they are not particularly labour intensive activities and cannot themselves sustain us. We do not have major industrial centres, nor an indigenous market to sustain them and provide a bedrock to build export atop as Germany or the United States do.
We’re no Australia, where natural resource exploitation is concerned, though even if we had it, one feels that there would be Green activists tied to every tree above a proposed mine. The country is not a natural transport hub, like the Netherlands, and it hasn’t demonstrated a tremendous amount of entrepreneurial drive to develop the next Facebook or Google indigenously.
When we do see a Stripe grow up in Ireland, the founders typically leg it to the far friendlier US shores for expansion in an ironic reverse investment flow.
The country is a pretty good place to put a data centre, thanks to our geological and climate conditions. Apple is following a multitude of tech companies by spending €850 million putting one here. When it’s up and running, however, it will employ 150 people.
Far more impressive is the 1,000 new jobs announced by the company this week, atop the 1,000 or so they’ve added just recently; mainly in labour intensive services roles. Also this week,
LinkedIn celebrated 400 million users with a montage of their Dublin staff celebrating various milestones over the past few short years. Their workforce grows dramatically in each photo as they have added high quality professional roles to support their global expansion. Google will soon own enough of Barrow Street to simply throw up border posts and secede from the country to form its own tax haven.
This is it, this is our competitive advantage. Yes, we have a well educated workforce – Though US firms have warned us in the past over grade inflation. Yes, we speak English. Yes, we are well positioned at the edge of Europe. Yes, it is easy to bring in multilingual and other talent when you can’t find it indigenously. Yes, we have a stable environment in which to do business. So does the UK, so does the Netherlands, so does any one of a number of our peers.
The CEO of an IDA supported company once told me blank that while Sandyford had nice views and The Shelbourne wasn’t a bad hotel at all, he’d be gone to London in a flash if he got the same tax deal.
So the next time you hear that the Irish state is prepared to fight the EU Commission over purported tax deal investigations, don’t roll your eyes. The Irish state isn’t fighting for corporate profits, it’s fighting for the jobs that we have in this country thanks to our corporate tax regime.
The Eurocrats and the left and the begrudgers can think again – tax competitiveness is the foundation stone that built Irish prosperity and that will drag us out of the mess we’ve been in the past years.
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