Sorcha Pollak
On August 30th, 2016, the European Commission ordered Apple to pay €13 billion in back taxes to the Irish State after finding the US tech company had been granted selective tax treatment.
A few days later, the Government appealed the ruling. Minister for Finance Michael Noonan said the appeal was to “defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules in the sovereign member state competence of taxation.”
The ruling evoked a public debate as to how the €13 billion in back taxes could be spent in the State, with this newspaper calculating the money could be used to build 20 new hospitals, boost our supply of social housing, abolish property tax or give us a break from the USC for three years.
The Government subsequently pointed out that under EU budget rules it could not use the one-off €13 billion windfall to fund day-to-day spending or tax cuts and it would have to go to pay down the national debt, which currently stands at €200 billion.
Dr Attiya Waris, senior lecturer at the University of Nairobi law school, argues that the Apple tax ruling also placed a spotlight over the serious disconnect that exists between taxation and human rights.
Dr Waris, who has dedicated her career to investigating how human rights can be financed through fair and just tax payments, says the “emotive reaction” to the Apple ruling both in Ireland and internationally was hardly surprising given the lack of information available to the public when it comes to setting corporate tax income rates for large multinationals.
"Things have changed over the past 12 years but we forgot to tell people they were changing," Dr Waris told The Irish Times during a visit to Ireland last month. "People are so busy not watching information and too busy entertaining themselves.
‘Very angry’
“With tax, we put money in a pile for a purpose. If your population is not aware as to how much they’re paying in taxes and why they’re paying it, you’re going to have a population that is very angry with its ruling elite.
“If I don’t know whether next year I’ll get my hip replacement surgery, whether I’ll get access to the low-income housing I was promised, whether my children can still go to school, then I become an uncertain taxpayer. Ask yourself, if I’m earning €1,500 a month and Apple could bring in €13 billion, where should the State take the money from? Mine or Apple’s?
“You want a taxpayer to be left with a slight taste of discomfort at the most by handing over that money. If they are beyond that, then you’ve moved your population to the point of antagonism.”
Last year, the Department of Finance released “spillover” analysis of the potential impact of Irish tax policy, including the 12.5 per cent corporate tax rate, on developing nations. In the report, Michael Noonan commended the State for “taking a lead” in such research and thus showing its “full commitment” and fostering “a trusting relationship between the developed and developing world”.
Dr Waris says the document fails to analyse the implications of the State’s 12.5 per cent corporate tax rate through a human rights lens and the subsequent knock-on effects on people in developing nations.
“The IMF [International Monetary Fund] and the World Bank have always recommended between 20 and 25 per cent corporate income tax. The World Trade Organisation recommends 15-20 per cent and has since revised upwards to 20 per cent. But in Ireland you’re sitting on 12.5 per cent.
“If you take 15 per cent from a company, the idea is that on average the amount you’re taking is enough to maintain the services that you’re granting,” she says. “It could be as basic as they’re using your roads with their cars. It’s the wear and tear of the country, and 12.5 per cent doesn’t cover that.
“By having a tax rate of 12.5 per cent, you are destroying the potential of developing countries to maintain their 25-35 per cent rates so that they can start becoming financially self-sufficient.”
Philip Alston, UN special rapporteur on extreme poverty and human rights, last year also warned of the human rights implications on developing nations of excessively low corporate income tax rates.
Speaking at a Christian Aid conference in Dublin, he warned that the State’s 12.5 per rate had descended into a type of mantra and that “mantras are simply slogans that are repeated unthinkingly”. He said policies that gave large multinationals “a free pass on tax” were especially damaging to developing countries which rely heavily on investment from multinational corporations.
‘Defining characteristic’
“The 12.5 per cent corporate tax rate and the willingness of Ireland to countenance a wide array of special arrangements designed to attract inward investment and make itself an attractive financial hub have become almost a defining characteristic of the society,” said Alston.
“Ireland’s much vaunted and hugely successful tax policies need to be kept under constant review and need to be re-examined in light of the broader priorities that it has as a society.”
Dr Waris says Irish people are right to be angry in light of the Apple ruling and that the Government cannot continue to cling onto its 12.5 per cent corporate tax rate while simultaneously raising the retirement age and failing to provide social housing or hospital beds.
“These are basic human rights – food, education, clothing, housing. The problem right now is there’s an inordinate amount of preference being shown to multinationals and to prices.”
Government officials setting these tax rates have “lost touch” with society, says Dr Waris. “Unfortunately, I see people working in tax and government no longer being members of the lower classes or even the middle classes; they’re now the upper classes. It makes me wonder if they’re even aware of the struggle that a low-income earner in a factory in Cork with two children in school is going to face.”
