In 2014 Donald Trump was welcomed to Ireland with a red carpet at Shannon Airport. What had the charlatan, blowhard clown done to merit such a reception, which also included a harpist, violinist and singer? He had bought the Doonbeg Golf Resort for €15 million. Most excruciatingly, the Minister for Finance Michael Noonan was there to greet him.
As Trump boasted about building a “truly great ballroom … people from all over the world will be using this ballroom” in Doonbeg, this newspaper’s Malachy Clerkin cast a wry, disappointed eye on the forelock tugging, writing “we’re surely a bit better than all the yes-sir-be-begging-your-pardon-sir that was on show”.
No, we were not better than that, as we were being represented by the Minister for Finance. Noonan was unapologetic. He said: “this man says he’s going to spend at least double the purchase price for investment down there”.
It was estimated that US foreign direct investment increased by 40 per cent in 2014 and that 100,000 jobs had been created since 2011. The OECD was duly impressed, not just by the figures but by the political weight overseeing job creation; in 2014 it praised “high level political buy in and oversight and the establishment of quarterly targets underpinned by a robust monitoring system”.
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The other PIGS (Portugal, Italy, Greece and Spain) did not have the same fallback on a strong export orientation in their economies. The upbeat narrative communicated was that the openness and globalisation that brought Ireland so low could quickly inflate it again and, in this sense, the multinationals kept Ireland safer than others. Given the scale of the crash that had been endured, there seemed comfort in that.
The slogan that Ireland was “the best small country in the world to do business” was much trumpeted. It was also, however, a damn good small country to enable the avoidance of tax. The year 2014 was also when the EU began a formal investigation into Apple’s tax arrangements in Ireland; its preliminary finding was that such orchestration gave the company an unfair advantage. That was widely known, and some contemporary US senators rightly highlighted that deals struck leading to the payment of little or no taxation “meets a common-sense definition of tax evasion”.
We were too often bamboozled with jargon in the hope, it seemed, that the resultant fog would distract from what was obvious. As far back as 1994 the Irish Department of Finance was angered by a paper by US tax academics James Hines and Eric Rice, which identified Ireland as a tax haven for American business. Economists at Berkeley and Copenhagen later concluded that Ireland was the biggest tax haven in the world, used by multinationals to “shelter” profits. Foreign multinationals shifted $106 billion of corporate profits to Ireland in 2015.
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The Department of Finance dismissed the findings of the economists as “overly simplistic”, stating: “Ireland is not a tax haven and does not meet any of the international standards for being considered such.” Pascal Saint-Amans, the head of the OECD’s tax policy unit, agreed that Ireland did not meet any of the OECD’s criteria to be so defined, those being that there were no taxes, no transparency and no exchange of information.
An academic paper in 2013, under the auspices of the Irish Department of Finance and the Revenue Commissioners, noted that Ireland “has on occasion been criticised for having characteristics similar to a tax haven”, but the comfort, it seemed, was that “there is no single and agreed definition of a tax haven”.
Perhaps not, but it is hardly surprising that Ireland’s favourable tax regime for businesses generated caustic comment from high profile commentators. Historian Adam Tooze, when writing about the decision of the German bank Depfa to move to Dublin’s Irish Financial Services Centre in 2002, a bank that went on to have total assets of $218 billion, noted euphemistically that the bank made this move “to take advantage of Ireland’s welcoming tax laws”.
Decorated American economist Paul Krugman was later dismissive of “Leprechaun economics” when Ireland’s GDP supposedly grew by 26 per cent in 2015 due to its tax arrangements and the distorting effects of multinationals. This astonishing figure was on the back of the relocation of €300 billion in capital assets to Ireland by multinationals due to a global clampdown on avoidance of tax by multinationals.
Oxfam also highlighted that by allowing corporate revenues to come through Ireland in a manner that denied tax due to other jurisdictions, Ireland was a “conduit tax haven”.
The Irish Government maintained it had to fight the original EU finding on Apple to defend the “credibility” of its tax regime. But such fiction had long been challenged, with good reason, and with the EU probing of the Apple case those enriched by illegal state aid were always likely to run out of cover and credibility.