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IT’S BEEN JUST over three years since Ireland was labelled as a “tax haven” on the floor of the US Senate.
It was a direct and public attack on Ireland’s relationships with multinationals and their tax, and it forced the government into a response.
Five months later, on the floor of our own representative house, Finance Minister Michael Noonan said that the government was going to crack down on ‘stateless’ companies registered here.
In the intervening years, there have been claims and counter-claims about Ireland’s tax practices. Claims of a ‘sweetheart deal’ with Apple, the biggest US tax avoider of them all, have been denied by the government.
But Ireland’s denials took another massive hit on Tuesday when GDP figures for 2015 were revealed.
While the Central Statistics Office had previously predicted a very strong GDP growth rate of 7.8%, the actual end result was a crazy 26.3%.
The figure is ridiculous not only for representing a growth rate nearly four times that of China, but mainly because it shows the scale of the effect multinationals have on Ireland’s small economy.
The massive figure comes in large part from multinational companies, like pharmaceuticals Medtronic and Allergan, moving intellectual properties here.
It’s not an exaggeration to say Ireland’s accounts became the punchline of the economic world for the day. Nobel laureate and New York Times columnist Paul Krugman called the stats ‘leprechaun economics”, a wonderfully cutting term that could be here to stay.
The Financial Times had the most fun of all, comparing the numbers to some of Ireland’s greatest works of fiction.
Ireland getting the mick taken out of it for the day is one thing, but as Aidan Regan of UCD’s School of Politics and International Relations points out, the damage is how it puts the focus back on Ireland’s tax regime.
*The bottom line here is that this is corporate tax avoidance and Ireland’s role in facilitating corporate tax avoidance,” he says.
I think this 26% figure will come back to haunt the Irish government and policy makers because it shines a light once again on Ireland’s role in facilitating corporate tax avoidance.
Questions about the GDP figures were put to both the Taoiseach and Finance Minister during the week. While they acknowledged that they don’t represent the scale of actual growth, there seemed to be little acknowledgement that such announcements are actually bad news for our image.
On the campaign trail for example, both Hillary Clinton and Donald Trump have referenced Ireland when speaking about the questionable ways corporate American uses international tax loopholes.
But if companies are still coming here, then why should we care?
Well, firstly because headlines about crazy growth rates and corporate tax avoidance distracts from the good things that are actually happening in our economy.
Even apart from 4.5% growth in consumer spending and reduced unemployment, multinational companies are increasingly basing themselves here. This should be a feather in Ireland’s cap but it’s being unfortunately overshadowed by the scale of the tax avoidance they are engaged in.
“There is real activity taking place,” says Regan.
Just go down to the Grand Canal Dock and look at the large tech firms that are there and the role of the IDA and Enterprise Ireland in facilitating both foreign direct investment and indigenous enterprise, there’s real stuff happening and these figures just make a mockery of a lot of that and it undermines the enterprise policies of the State.
It also presents other problems, like making it impossible to measure things like exports as a percentage of GDP. Referencing the national accounts when making public policy choices also becomes difficult.
Perhaps most of all though, as international organisations like the EU the G8 make targeting aggressive tax avoidance a priority, global multinationals like Facebook and Google won’t be too happy if Ireland’s accounts keep bringing them bad headlines.
That more than anything is something that’s worth avoiding.
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Obviously it’s important to keep the jobs that these multinationals provide but the fear that they’ll pull out if we enforce the 12.5% rate is laughable. Our rate at its headline rate is one of the lowest in the developed world. And on top of this where will these companies find both educated and qualified English speaking staff with access to the European Union. Grow a pair Noonan and grab the billions owed to this country and give its citizens a bit of a tax break.
Stop kidding yourself tthese companies are not interested in our well educated staff, they can get them anywhere these days. Most of these companies are using Ireland as a post box for convenient tax evasion and nothing more.
The only thing that grew, is the number of clowns running the country.
Keep the recovery going for the 1%. The state facilitates wholesale corporate welfare while imposing crushing austerity on the majority working class. Ordinary people who vote for FF, FG or Labour are complicit in their own exploitation.
In fairness, what are we expecting with noonan and the finance dept. They made a pure balls of the fiscal space during the election and noonan won’t appear on the vinb show because vinb will show him up for how little he actually knows.
I’m sure you would rather all they people they employ to lose their jobs. Typical champagne socialist!
I guess you would rather all the people they employed lost their jobs. Typical champagne socialist
It’s not really incompetence though Adrian. Noonan and his party represent the interests of capital and have done so since the foundation of the state. Ditto for FF.
We must close down the ” Liechtenstein on the Liffey” scams, and enforce the correct tax rates.
No need to hassle our poorer citizens for water taxes with this extra revenue either.
A win win for everybody.
Tractor Pat. Its because Enda and micheal don’t believe in the people or that the Country should get more respect from Europe.
This situation is comical, these multinationals have turnovers the size of our economy and we tax them an absolute pittance…
Any wonder Miss Merkel and co laugh at Enda as he goes over begging for special treatment during Brexit…
The thing is that we are not so much laughed at for being funny. We are being laughed at for being stupid and ignorant over the handling of our citizens. Where else in Europe would you endure twelve hour waiting to see a doctor in hospitals and people sleeping in the streets even though the census tells us that there are thousands of vacant houses.
Wake up Ireland and smell the coffee.
Chris, their is homeless in every country, you need to travel more
Brian, thanks mate I feel a lot better for you telling me that….!!
Chris try visiting San Francisco. Some streets have dozens of people lying there homeless. I don’t see that in Ireland. Open your eyes to the world.
Fred. There are dozens of homeless people lying on the streets of dublin open your own bloody eyes.
No there’s not ray, nowhere near the numbers i’ve seen in San Fran or Boston. Truth matters.
brian magee, the only place i have seen comparable homelessness in was Brussels when i was there last January. Families were sleeping in shop doorways in the center of Brussels, not one or two families but many.
I have traveled, i have seen homeless people on the streets, we have them here in Burgas, Bulgaria, but i haven’t seen homelessness to compare with what is happening in Dublin or Brussels in recent times.
Fred.I am not interested in san francisco or boston. I am concerned about ireland and one homeless person sleeping on the street is one two many. And that is the only truth.
Fred how many times would Ireland fit in America of course there may be more homeless people, america is much much bigger than our wee Country.
@Chris in limerick you wait anything up to 54 hours to see a doc in A and E. People are dying rather than visit it.
What’s your point Fred and Brian? Because there is homelessness around the world we should suck it up too? Just because America has say the death penalty doesn’t mean bring it here as well..
It’s quite refreshing seeing these mad figures laughed at internationally. Nationally Enda and Noonan would be bigged up as geniuses by the media and most people would not question it for a second.
I think after he lost the fiscal space argument and showed them to be a populist give-away party and FF and labour followed suit blindly, the public I’m sure are quite aware of his and his party’s incompetence.
Peter, incompetence is not the preserve of the Fine Gael party, Ireland has bred incompetent peopleto lead it for generations and we have taken it with a pinch of salt.
Chris. No we have voted them in,
This ‘Leprechaun Economics’ thing really pisses me off. The CSO measure GDP the same way every country does. The fact that we are a small economy skews the figure massively, but it is still the figure. A fact. Perhaps it could have been buried in the report but it would have come out anyway and then it would seem like we were hiding it. Lose. Lose.
the leprechaun economics tag is there for a reason, through international measurements we are claiming that GDP is growing excessively, but this is purely based on a small number of American companies continuing to use Ireland as a tax haven, pure and simple. having GDP growth of 26%, and not seeing an increase in income of anywhere near that highlights this. The fact that Noonan’s personally acquired national debt will *appear* smaller by publishing debt-to-gdp figures for political gain makes it farcical on a national scale as well. We are allowing our country to be used and abused, and unless we take control from blinkered idiots like noonan, it will end up blowing up in our faces.
The CSO bent over backwards to let people know the figures were skewed. The one thing they can’t do is misreport or manipulate the position -they are constrained by international standards. They announced the reasons why the figures were distorted at the press briefing. They put out a statement saying so. But Krugman and the FT are far more interested in clickbait than the truth. This has done zero damage to us. The more times our CT rate is in the headlines the better. CT is up almost 100% over the last three years.
Krugman and the FT are not attacking the CSO they know full well the figures are factual, they’re attacking Irish and European policy makers who would seek to use these figures to bolster arguments that Ireland has recovered and evidence of the success of austerity when in fact if you measure the actual meaningful figures for Ireland’s economy like consumer spending, the metric most closely linked with quality of life, or nominal wages, were still below pre crisis levels 8 years on
“In Boston he met a pretty lady, fat and forty, and beautiful with the bloom of cash and collateral”
….Flann O’ Brien
The spark that probably ignited Ireland’s successful FDI Programme from over fifty years ago.
Exactly Cian. That is our correct GDP figure. And i’d rather have more production here and more taxable assets here than less. All good.
what production? we have a country full of land and agritech potential, and yet our GDP can jump 15% on the tax avoidance decisions made in a single companies boardroom. The very same company actually shut down several manufacturing facilities in the last few years here. We are no Singapore here, just another Cayman island with a touch of EU credibility.
When this claim of GDP figures came out the last day the GOVBOTS who claims everyone else is economically illiterate and they are so suave and sophisticated lapped it up and rejoiced in their own delusion. A bit like their master in the Dawwl. Of course the child that just got the summer hols from primary school heard the figures and curled up into a little bawl having the best chuckle since Zootopia. The adults just despaired , well not all some the idiots believed it all. Watch out for them as they contribute on this site with shocking ignorance and brazing neck.
Fantasy Economics by the soldiers of fortune and the Banking gaels. Larry the leprechaun economics that got us into this holy show and had the whole world thinking Darby O Gill and the little people are ripe for the robbing. Nice figures lads . Tellytubbies.
Typical of every Irish government ever elected. Let’s shaft the people and look after our buddies in big business. Always has been this was and always will.
Sadly, our senior politicians are more about maneuvering themselves into strategic ministerial positions and waiting for someone else to fix the country’s problems so they can then take credit for it, because they certainly ain’t capable themselves!
It was hilarious reading all the comments on here from the gullible majority who actually believed these figures. How could the CSO release these farcical figures?
because that is how GDP is measured
The reason why the CSO releases these figures is because the truth is even more shocking. The 1% of the population which don’t appear in the census figures have a lot to hide and there are no counting the numbers of people who are actually homeless or waiting in thecorridors of our hospitals waiting to see a doctor.
Chris I’m not sure what you’re trying to say. The 1% not included? Can you just drop the ideological blinkers please. GDP is meant to be a measure of economic activity. In Ireland GNP has traditionally been a better indicator. However both figures are now distorted. Partly this is due to our small size and to being one of the most open economies in the world. But it is mainly the structure of our economy and its multi-national component that is the problem here. The CSO measured GDP using the appropriate methodology but the figure is distorted. Now we need to dig deeper to find out why. This is a serious issue. We need some metric by which to measure economic growth. We don’t need to throw the baby out with the bath water to fix it either. Our foreign multi-nationals pay a lot of tax and provide a lot of well paid employment.
John, using tradition as a means of trying to prove a point really is no excuse for stupidity or trying to hide the truth. The fact is that thousands of people ignored the census altogether or didn’t even open the door to the enumerator shows that people are living here under the radar. There are other ways to measure economic growth such as reduced unemployment, increased tax intake from retail, numbers of new vehicles registered etc. The problem is that society in Ireland is becoming multi layered, you can say that there are a lot of well paid jobs, but then consider that the elderly are not getting increases in their pensions and the waiting times in Irish hospitals is third world standard. Most of the doctors these days are Asian and many nurses and teachers are trained outside of the country. That is the real metric of our economy I am afraid.
@Fluffer : which just goes to prove that any figures produced from our Govt, on any subject are equally farcical. I don’t, won’t, believe a single one. Including claims of ‘recovery’.
John hysterical over-statement is your hallmark. The figures produced by the CSO were correct except that they do not accurately reflect Irish GDP. Confused? Well they produce the figures based on a technical book provided by Eurostat which all EU countries must use. The book is flawed. Especially so in Ireland’s case but we are obliged to use it. Based on this technical book the figures produced by the CSO are technically correct but do not reflect reality. They do not reflect on the competence of the CSO but on the competence is Eurostat.
John I agree with you there
Enda and noonan could join Carl pinkerton in a new series of ” idiots abroad”,
Aren’t we a great little country for doing ourselves down? Everyone knows those figures don’t paint the full picture, so we don’t need to continuously sell ourselves short and denigrate ourselves. Our competitors are well capable of doing that.
Mickey Noonans Fiscal space says all about this FG government . ..
Seriuosly but people..the dail with each passing week is looking more and more like a scene straight out of fr ted.Any good or decent comedian could get years worth of material listening/watching the DAIL for about an hour alone
An fragile economy built on sand
Our economy is strong and well diversified, built on tech, pharma, finance, agriculture, tourism and aircraft leasing.
Now now Fred, optimism on the Journal? And facts? We only denigrate Ireland on the Journal. Get with the programme !
@Fred and John. Deluded.
Christopher G, sad, paranoid and angry. Stop hating. Start living.
I hear the recovery is growing at 27%, only I’m not laughing.
There’s a decimal point missing.
Is anybody surprised when the Churchill’s bulldog doesn’t know the difference between 216 and 2016.
Will somebody please tell Noonan to say the years correctly? Saying “215″, “216″ etc. comes across as sloppy, lazy and ignorant.
Noonan’s voice grates on my nerves like nails on a blackboard ahhhhhhhh.
Great for Giftgrub though.
Can someone please tell me who’s responsibility is it that Ireland has some respect as a Nation in this regard. Am I wrong in thinking a Finance Minister’s head should roll for this. Is the responsibility not his?
Christopher the entity actually responsible is Eurostat and not the Taoiseach. The CSO are obliged to use a technical process for calculating GDP that is set out by Eurostat. They have no choice. The figures produced are “correct” in that they were calculated correctly. Of course they are plain daft but the body responsible is Eurostat. They have been warned that the technical process used for calculation is flawed and especially so in Ireland’s case given that our economy is by far the most open in the EU and has several unusual characteristics. Stop pointing. fingers at politicians. This is down to the technocrats.
So Noonan has nothing to do with it so?
No Chris. Sorry to say but Noonan has nothing to do with it. The CSO are independent in terms of producing their stats. Thank goodness for that. Because in Greece their equivalents was politically run and cooked the books. If you want to blame wow one for this technical outcome blame Eurostat.
Of course they have a choice. What they don’t have is a spine, and the balls to stand up and call BS on this charade of a report. When the numbers were apparently obviously ‘for the birds’ they should have stood up and said “Stop, we cant publish this nonsense : to do so would undermine any credibility this organisation, this State, has on pronouncements on the economy “. But no, in deference to Germany we’ll stand up like green muppets and like being laughed even if it betrays common sense. So much for working or putting this country’s interests first.
100% John.
John R. That is. John Moylan absolutely disagree. The figures are the figures calculated as per international practice. They were delivered with a health warning. The cso could do no more.
Thanks Cian. Entirely agree with you. I’m afraid that John Moylan is just angry and doesn’t really understand what he is commenting upon. It’s a Journal thing. Just spout off and talk bull. Acquiring knowledge and subsequently some understanding requires work. Suspect Angry John is work shy when it comes to facts and knowledge.
As someone who manufactures exports product for a living I’m far closer to being accurate than your defense of the bureacratic stupidity. Enough posters have said the methodology is wrong : so why are we wasting time doing it? What volunteer to make fools of ourselves? And why are we waiting for someone else to point out the patently obvious ? Is this not supposed to be an EU of equals.? …..oh, wait……silly me. Our job is to be the lack, I forgot. Mea maxima Culpa. …
Any good business, in publishing its accounts, will annotate those accounts to show unusual events that may have impacted its bottom line- for example the sale of a subsidiary company that brought in a windfall, or a one-off payment of redundancy.
Not only do they make note of it, they state the actual amount due to the unusual event and show a profit or loss after deducting this figure. This would then allow investors to look at a true comparison of performance year on year.
Why couldn’t the CSO calculate a 2nd GDP figure net of the jiggery pokery of tax dodging?
Instead, we have our Taoiseach in the Dail saying he will drive public and fiscal policy by guessing the true figure. In which case, why don’t we simply give everybody in the CSO their P45s and save us a few bob, given they do not/cannot produce any stats that are meaningful or useful?
Noonan & Kenny are the Laurel & Hardy in politics and continue land us yet ‘another fine mess’….. (With due apologies to L & H )
Why are some complaining? A higher GDP is better than a lower GDP, it means there’s more taxable assets, just look at how corporation tax has gone through the roof. If the likes of Allergen have moved their intellectual property here, than means it becomes taxable here also.
We need to understand that if those patents were not here, they would be in the bahamas instead. And if the aircraft leasing industry was not here, it would be in Singapore or Dubai instead. The EU should be thankful that they have at least one globally competitive economy in the eurozone.
@Fred – higher or lower in this case makes zero difference to the citizens of this country. Product is neither made nor exported, nor consumed domestically, no jobs are crested, and no outflow to the general economy via consumers as they don’t see any of this “money”, to spend it. It’s a complete fabrication.
One of the difficulties with the absurdity of such a figure is that it is used as a comparative baseline for other measurements. Don’t be surprised if Norman or some flunky claims great success in the management of the economy by pointing to a great reduction in the national debt, or some poverty executive slamming the reduction in the country’s contribution to efforts to deal with third world poverty, both using the same outlandish data. In real terms both the national debt and the payouts to third world charities will increase, both trivial things like the truth won’t matter when such people have an important message to deliver.
You’re right about that, we’ll see Trocaire whinge that our contributions to the third world as a proportion of GDP have declined now, when in fact the cash amount has increased massively.
Whose bright idea was it to have Germany ruling Europe i want back to the old loveable Ireland i grew up in.
Which one, the one where the church rules with an iron fist? Where we had marriage inequality? No divorce? Where it took up to 5 hours to drive from Cork to Dublin? When mortgage interest rates were 15%? You’re ok thanks. ;-)
Sure Enda thinks this a grand little Country, his head is in the sand and he will retire just as the sh.t hits the fan, thats our Enda. By the way enjoy your holidays you worked so hard NOT.
There has just been an election and this racket rated poorly on the list of political priorities.
Both sides of Irish conservative politics have instigated and supported this Multinational “cash box/EP/patent/
transfer pricing international tax avoidance scam. It is supposed to quit on the 1st Jan 2020…..or is it?
The Press has been remiss in not qualifying the Government on what it means by “discontinuing” these
tax scams by 2020.
What will be discontinued?
Will other scams be instituted instead?
What tax scams will remain?
BL
PS: We spent over E150 this week dining out and none of the vendors would accept cards!!! I wonder why?
Could it be that the Multinationals’ tax “minimisation ” larks are as catching as the common cold?
…………………………………..Excuse me while I sneeze…..ob chew!………………………………………..
@Brian Lynch. What rubbish is this? Vendors wouldn’t accept your cards. That’s bull. Unless you’re using AmEx which charges retailers massive fees and are commonly not accepted or you were eating in places that just don’t accept cards. Such tosh.
A Laughing stock???? This is so far from the truth it’s ridiculous….. There’s a lot of bitterness in the US over US jobs going overseas when there are massive economic/employment blackspots at home – A few barbed comments and bitter jibes aimed at a massively lucrative economic coup for Ireland that has employed half the country in very well paid jobs does not make us a laughing stock. It simply serves to lose you your journalistic integrity as you aim for a cheap shot, inaccurate, sensationalist headline.
Well said Kane.
We deserve the thick paddy monickers for electing these f-ing gimps in the government.laughing stoke of the western world..
What does this government take us for?
Yeah a laughing stock in Spain too, they are Singing about the Famine there !@:$
https://www.facebook.com/240233392978809/videos/304490953219719/
I do wish people would realise that the Tax Avoidance is not Tax Evasion and it is what everyone who can does in their own little way – be it with inheritance or land or gifts by individuals and expenses and their timings by companies etc. – it might help to pay a bill early or late if it changes the tax year and rate for example – so Tax Avoidance is possible because the law allows it.
Where companies operate to obtain their revenue they should be paying local taxes (VAT etc. according the that countries rules) on their earnings (less expenses). These guys employ thousands if not hundreds of thousands of people in Ireland and pay the income tax and paye of these employees to the Irish State. The issue is that these companies obtain most of their revenue’s outside Ireland and channel it here and pay their employees and after expenses their profits can be assessed for Corporate Tax – according to Irish Corporation Tax rules.
So the moneys paid by these multinationals include employing people in Ireland to provide product or service that they sell to the rest of the world and tax on profits made overseas (as well as Ireland).
The really cute thing about Leprechaun Economic is that the Leprechaun is sitting on the pot of gold and it is driving the world mad with envy as they chase down rainbows – only a Leprechaun and a cute hoor could beat the British, the Gremans and the Americans in the Corporation Tax War.
At least we are good craic! We are mad for the craic!!
Never ending growth in a finite world with finite resources, how can that be sustained or even true?
Money as a commodity is made up and so is infinite. That’s the problem.
Only spilt blood will make this country sit up and sort itself out.
We have been undermining HMRC for so long it’s funny
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