|Fintan O'Toole by Jon Berkeley|
"I was browsing Forbes, the magazine for billionaires, online about a year ago. There was a piece about Ireland’s status as a tax haven. Apparently through some technological glitch, you could see that two phrases had been edited out and replaced with euphemisms. Thus “Ireland’s tax favoured status” was struck out and replaced with “Ireland’s hospitality”.Fintan O'Toole explained how critical language is to international community's perception of Ireland:
And the statement that “US companies can pretend to be headquartered in Ireland in order to avoid US tax” was doctored to say that US companies can “set up shop in Ireland”. This kind of thing is amusing, but it’s also deadly serious."
"The Forbes piece is a perfect illustration of how vulnerable the perception of Ireland is to changes of language. Ireland is either a hospitable place where you can set up shop like a friendly village grocer or a cynical tax haven, and increasingly, in the US, it is routinely referred to as the latter.
And he continued, noting that Ireland will give up control of child welfare and other aspects of spending, but not the rate at which corporation tax is set:
"Over the last half century, Ireland has worn more hats than a busy character actor... But behind all of these guises, there has been one constant: this is the place you come if you are a big corporation looking to avoid taxes. It is not an exaggeration to say that this is the real national identity. What was the one thing the Government of the day insisted it would never, ever bow the knee on to the troika? What was the one shred of national sovereignty to which we would hold?
Not child welfare nor an education system nor a refusal to ruin ourselves by nationalising private banking debts, but the 12.5% corporate tax rate. Pathetic as it may be, very low corporate taxation is the single thing by which we have come to define our existence as an independent republic."
And here's the important bit, low corporation tax rate is a flimsy economic column:
"Leave aside the moral questions this raises. Just consider how dangerous it is for a country to bet its future on the belief that it can go on forever facilitating global corporations as they seek to deprive their home governments of income.
The danger is threefold, Fintan explained:
- First, a country that has the magical manipulation of big monetary numbers at its heart is a country that struggles to know itself. Not in a mystical, spiritual sense, but in the most literal way. We don’t really know what “the Irish economy” is. Because of all the games of shadows, Irish GDP is largely a fictional construct.We used to think that GNP was a real measure, but, as John FitzGerald showed in an ESRI paper last week, that is now heavily fictional as well because it is padded by the vast “profits” of brass-plate companies that contribute nothing to the Irish economy. This jiggery-pokery has a huge effect on basic questions such as whether the economy is growing or shrinking. Thus, GNP officially grew by 1% in 2010 but, if you remove the funny money, it actually fell by 2%. In this way, we can’t grasp our own reality and are left at the mercy of spoofers spinning stories.
- Making a fetish of facilitating corporate tax avoidance is dangerous because we have become incapable of imagining life without it. We do not ask the basic question: what if it stops? What if we lose this ability to offer tax avoiders sweet deals? This is not a far-fetched idea. Pressure is growing in the US and the EU to make wealthy corporations contribute to the correction of vast fiscal deficits.
- Lastly, the refusal to think beyond the lure of tax avoidance is dangerous because it has left us with no national development strategy. “Come here and pay low taxes” is a plan developed in 1958, the year I was born. I’m creaky and middle-aged and so is the strategy. It is long since time to realise that a policy born in the 1950s is not going to carry us through a 21st century crisis.”
"The foreign places where American corporations get the greatest profits aren’t China or Japan or Germany or any of the big countries. They’re places like the Netherlands, Ireland and the Cayman Islands that are really tax havens."
Irish economist David McWilliams said that "both the Financial Times and the New York Times carried banner pieces criticising how Ireland is being used and, more to the point, is allowing itself to be used as part of a large tax avoidance scheme."