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Ireland's political and cultural magazine
September 2016 9
In 2007, the chairman
of the Revenue
Commissioners was
Frank Daly, now head of
NAMA, and it might be
instructive to have his
view on how a tax ruling
by his officials threatens
the government, in 2016
S
hane Ross knows a thing or two about US
multi-national corporations and the way they
operate in this globalised economy. They
avoid tax, in particular the 35% rate that
applies in the US. No amount of huffing and
puffing by Tim Cook, Michael Noonan or anyone else
can alter that fact, and Ross knows it.
As Joseph Stiglitz put it, the Irish government has
been complicit in assisting Apple, or more precisely, its
Irish subsidiary ASI, in massive tax avoidance.
“The fact is you were avoiding tax and you knew it”,
said the Nobel-prize-winning economist. “Whether the
income was correctly attributed to Ireland is another
matter. If Apple is saying that this is Irish income, you
have an obligation to impose taxes on income that they
say originated in Ireland”.
Pocket the money and use it to meet
the needs of the Irish people for homes,
schools and hospitals, he told RTÉ.
Put simply the EU commission has said
to the Government that a Revenue ruling
in 2007 was not based on any real figures
but was more a negotiation with Apple
that helped the giant corporation avoid
paying any tax on profits it gained from
sales of its products in countries across
Europe and the world.
The 2007 ruling was a negotiation with
Apple based on earning projections pro-
vided by the company, the EU Commission
argues. It was wrong in that it allowed
Apple to declare income earned in other states as Irish
income because it was booked in this country. The
ruling was based on a similar 1991 letter of comfort pro-
vided by the Revenue Commissioners to Apple.
The Minister for Finance in 1991 was Bertie Ahern and
in 2007 it was Brian Cowen but it is unclear what knowl-
edge or involvement either had in the deliberations
between Apple and the Revenue. In 2007, the chairman
of the Revenue Commissioners was Frank Daly, now
head of NAMA, and it might be instructive to have his
view on how a tax ruling by his officials at that time has
ended up threatening the collapse of an already shaky
government, in 2016.
For Shane Ross and the Independent Alliance (IA) the
issues are more immediate and stark. Fine Gael
ministers and staffers have already conceded a recall
of the Dáil which will provide the political cover for the
coalition independents when they vote in favour of an
appeal of the EU Commission ruling on Apple.
That cover will be provided in the main by Fianna Fáil
supporting the government in a Dáil vote.
“Fianna Fáil are the crucial ones”, one IA source told
Village as we went to print. The party’s finance spokes-
man, Michael McGrath has already indicated such
support and that is hardly surprising as Fianna Fáil were
in power when the controversial tax rulings were made
and never expressed any concerns with the arrange-
ments over the past 25 years.
Fine Gael ministers are not so happy about the
second demand by the IA which is for a “strong and
decisive” motion on taxation policy which Noonan and
his advisors argue has the potential to undermine dec-
ades of an industrial strategy based on foreign direct
investment and the 340,000 jobs it supports across the
country.
As the internal coalition wrangling continues few in
Leinster House believe that Ross et al. want to pull the
government down or that he will not bring his troops
across the line when it comes to the vote on an appeal
of the EU ruling.
What matters is the public perception of how the vari-
ous parties and independents have acted in the face of
an apparent gift to the exchequer of €13bn (plus €6bn
interest).
No one seriously believes either that this amount will
somehow arrive in time for a budget anytime soon or
that it would survive intact the legal challenges any
transfer to the Irish state from Apple would meet from
the company itself, from other states where the income
was earned or from the US authorities. And of course
Apple is to appeal the EU ruling. But there is no harm in
seeking the sun, moon and stars.
The €13bn Apple debacle comes on the back of the
government turmoil over fatal foetal abnormalities
before the summer and the recent trauma of the Olym-
pic games when Ross was humiliated by the chairman
of the Irish Olympic Committee before Patrick Hickey
landed in Bangu jail in Rio for alleged ticket touting.
Not for the first time the survival of this weak admin-
istration depends on Micheál Martin and his party. How
long can this go on?
Fragile
But the independents won’t pull
the rug and the €13bn won’t fill the
coffers any time soon
by Frank Connolly
