Split over Apple tax ruling sign of Coalition going awry

The Apple ruling by the European Commission has started the autumn political term with a mini-earthquake, which may end with the crumbling of the Coalition.

Yesterday’s decision has pitted the Government against the European Commission, a conflict being waged on the Irish side with a high degree of aggression.

It has thrown Ireland’s long-held policy of solicitousness to multinational investment in return for a favourable tax regime – practised by all governments since the 1960s – into doubt, undermined by Apple’s astounding aversion to paying tax and the extent to which this was facilitated in Ireland.

Most immediately, it has set Fine Gael against the Independent Ministers, dividing the Government. The divisions rendered them unable to reach a decision at Cabinet yesterday to fight the EU ruling – a decision that had been previously widely advertised by both the Minister for Finance and his colleagues.

Serious threat to the future of the Government or a passing disagreement? What happened is that the Independent Ministers rejected a request by the leader of the Government and its most senior member on what they explicitly regard as being in Ireland’s vital national interest. That’s serious, by any definition.

The Independents’ reasons are not, as yet, entirely clear, other than a vague sense that it is unfair that Apple pay little or no tax and Ireland should not be colluding in this. They surely do not believe they can get their hands on €13 billion if Ireland does not appeal, if only because it is not a remotely credible belief.

Abortion

The stalemate has resulted in the second serious Cabinet split in less than two months, after July’s stand-off on Mick Wallace’s Bill to allow abortion in cases of fatal foetal abnormality. On that occasion, Fine Gael Ministers swore publicly and privately (somewhat more decisively) that this could not happen again.

Well, it is in the throes of happening. On this issue, the Government is – at least temporarily – paralysed.

One of the failures of political commentary is that it too often diagnoses crises where only differences of opinion exist. But this is more than a difference of opinion: it is a failure of Government to function.

That is the sort of thing that cannot long endure if the Government is to survive.

Either the Independent Alliance – whatever their price – agrees to appeal the Apple judgment in the coming days or the Government has had it. But even if the division is patched up and a deal is agreed to allow the State’s appeal to go ahead, the episode has been extremely damaging for the already-fractious relations between the two parts of Government.

Moreover, it is probably corrosive of their ability to work together in the future. The Independents also feel a political need – like every small coalition partner – to assert their identity and independence in government, to remind people that they have a purpose in office. That cannot be divorced from the current division in Government. But they also have a point when they say that Fine Gael has to take them seriously as a part of the Government.

Political wheeze

To Fine Gael, the position adopted by the Independents is a purely political wheeze – and worse, it is playing politics with a vital national interest. “Throwing shapes,” said one senior Fine Gael person. Party colleagues were less charitable, and some of them were a lot less charitable.

It would be difficult to overestimate the extent to which Fine Gael believes the Independents are being colossally irresponsible on this issue. Even if the difficulties are overcome in the coming days, that perception will continue to fester. This is not just the usual difficulties of Coalition government; this is a relationship that is going badly awry.

The politics of this, of course, is that the Independents will get flayed alive for agreeing to back the Government/Apple appeal. Explaining why you want to give back €13 billion is a hard sell, let's face it. Fine Gael will get flayed too, but Enda Kenny and his colleagues who governed through the worst recession in the country's history, and who have the scars on their backs to prove it, are used to that.

The Independents have yet to find an accommodation with the regular public opprobrium that goes with governing in an anti-political age. Perhaps they may never find it.