Fair Game or Just Dangerous – Subsidising Multinationals
The Irish government’s trade mission to the United States of America found it’s way to California to meet the Governor Gerry Brown who took the opportunity to have a dig at Ireland’s tax regime. In particular he noted that Apple, a Californian company, might as well be an Irish company at this stage by the way they use creative accounting to funnel profits through Ireland.
Though it should be at the discretion of a nation to design it’s own tax regime to attract business, it should still maintain a level playing field at home. If the EU investigation mentioned in the article does find what many already suspect, that Revenue have given special tax deals to some multinationals, then we have the unfair situation of our nation’s corporate tax burden being carried by our indigenous industries for the benefit of private company profits of very large foreign corporations.
This is certainly not ‘fair trade’ and the Irish government could find itself in hot water with the EU. Gerry Brown can be forgiven for being annoyed that Apple are able to divert profits to Irish registered companies where they pay tax far below even the low rate Ireland offers . Surely the hard pressed taxpayer in Ireland feels the same.
This is worrying because it creates a dangerous political problem. It appears that vested interests and lobbyists for corporations have huge influence over the decisions of the Irish government. Corporations are becoming so large now that they have turnovers bigger than many countries’ GDP.
We have the unhealthy scenario where multinationals can come to a country like Ireland and offer us a thousand jobs if we give them better terms than anyone else in the marketplace. So we give them large start up grants and government investment, and then we do unfair deals on tax and allow them to basically launder foreign money through the Irish registered companies.
If we aren’t playing ball they threaten to give the jobs to eastern Europe. If we do play ball they come here, use the slush fund and when it runs out they close up and move production abroad anyway. Of course they return again when the new grants are available.
OK we understand there is competition going on because global business wants to find a profitable place to operate from and export, but as Gerry Brown and the EU are suggesting, unless we have some kind of international cooperation amongst countries on this issue we are going to perpetuate and worsen a problem that will see the political influence of large multinationals growing and the continued subsidising of their profits by the small and medium sized companies who pay much higher costs for their trade.
This unhealthy balance of power will only get worse with the imminent introduction of the TTIP being agreed between EU and US governments as the power of corporations over governments will stretch beyond arm twisting to the force of law. We all need to take a step back and demand transparency, honesty and common sense from our politicians who are driving this.