Saturday 21 September 2019

We may be a tax haven - just don't say it to our faces

Editorial Comment

THE chorus of outrage that has greeted Ireland's inclusion on yet another list of prominent tax havens is nothing if not predictable.

It is a fine example of those classic Irish contradictions we encounter in almost every aspect of our daily lives. We may loathe something, and constantly deride it among ourselves, but God help anyone else who has the temerity to question it.

On Monday, Oxfam placed Ireland sixth in a list of 15 countries that it believes are tax havens and which help multinational companies to avoid tax on a massive scale.

Oxfam's list is not the most scientific ever compiled - the OECD's is far more comprehensive - but it does once again spell out in very clear terms how millions of taxpayers across the world see us.

Irish people may well feel aggrieved at appearing on such a list but in all fairness, and to be quite frank, Ireland has been asking for this for a very long time. Our low corporation tax and the constant effort to attract foreign investment have been at the heart of successive Irish Government's economic plans for generations.

As has become blindingly apparent thanks to revelations about the tax arrangements of tech giants like Google and Apple, our Government is willing to go to extraordinary lengths to woo mega-corporations. The policy has resulted in many thousands of quality jobs but we have also lost billions in taxes that could have been invested in health, education, welfare or other areas.

So is Ireland a tax haven? Well one difficulty arises from the fact that there isn't any legally accepted international definition.

It should be mentioned that this has proved most convenient for numerous Irish Governments who have been able to use the lack of a definition to provide some, dubious, legal support for their claims that the Emerald Isle most certainly is not a tax haven.

While there isn't an accepted definition, the US Government Accountability Office (GAO), in a 2008 report on tax dodging, did identify common characteristics of so called tax havens.

As the US GAO has it, a country can fairly be seen as a tax haven if it offers corporations zero or nominal taxes; if - when required - there is a lack of effective exchange of tax information with foreign tax authorities; if there is a lack of transparency as to how the system works and, finally, if there is no requirement for the company to actually have a substantive local presence.

How many of these remind you of the set up in Ireland where hundreds of shell companies, some with no employees whatsoever, have spent decades booking their profits on Irish shores to lessen taxes at home? Ireland is not alone when it comes to a convoluted corporate tax regime - many of our EU neighbours also have questions to ask - but we do have one of the more brazen systems.

Low corporate taxes have been the cornerstone of Irish Governments' economic plans since the Lemass era and successive government's have - quite correctly - used every trick in the book to maximise the advantage they have given us over our more expensive international friends and neighbours.

Indeed the 12.5 per cent corporation tax rate was one of the few economic policies that the Government managed to maintain in the face of fierce pressure from the Troika after the bailout. That the Government fought so doggedly to keep it, shows just how vital the financial mandarins see it as.

Our historic corporate tax policies have, in the main, worked out incredibly well but we need to stop telling ourselves that we're whiter than white when the evidence is to the contrary.

Wexford People