Shane 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 provided 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 provided 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 knowledge 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 spokesman, 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 arrangements 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 decades 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 various 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 Olympic 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 administration depends on Micheál Martin and his party. How long can this go on?
By Frank Connolly