Windfall is a lovely word, redolent of mists and mellow fruitfulness. It has a delicate, poetic character unsuited to the rough and rowdy ways of electoral politics. And yet it is the word that defines the election. There is something appropriately surreal in the way Irish politics hinges on such a lush metaphor – what do we do with all these golden apples falling from the American corporate money trees in our little Eden?
Seán Ó Faoláin once called the Irish a nation of apple-lickers, meaning that if we were Adam and Eve in the Biblical parable, we would have been too timid to actually bite the apple and would have just licked it instead. This became all too true when instead of the apple of knowledge we were first offered the unexpected bonanza of Apple’s €13 billion of unpaid taxes.
Official Ireland was too terrified to bite, worried that there might be a satanic snake lurking in that bountiful tree, just waiting to bite us back. But we all licked the apple, salivating at the tantalising thought of such riches.
And now even those billions are but one part of the bigger bonanza. The yield for the State from corporation taxes increased fivefold between 2011 and 2021. And it is continuing to mushroom. In 2021, it reached an astonishing high of €15 billion. And then we moved into some unmapped terrain far beyond astonishment. The current Department of Finance estimate is that it will reach €37 billion by 2030 – 10 times the corporation tax yield in 2011.
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Or maybe not. Maybe this future is a mirage. Maybe Donald Trump will take it all away. The problem with being in the fiscal Garden of Eden is that we know how that story ends – you get expelled naked into the harsh world and have to earn your bread by the sweat of your brow.
At the core of the dilemma is that we’ve won the lottery without even picking the numbers or, to nationalise the metaphor, we’ve found the crock of gold at the end of the rainbow without even trying to catch the leprechaun. The whole thing has an air of the accidental about it. We’re not dealing with a situation the State created by careful planning. If anything, it’s the opposite: this is a jackpot we tried not to hit.
The State didn’t want to take the Apple money. It fought a rearguard action against the reforms in the international corporate tax regime that have actually led to our current good fortune. It tried everything not to increase the rate of corporation tax to 15 per cent – a change that will (all else being equal) give us an extraordinary harvest in the lifetime of the next government.
Hence the weirdness of the election. At one level, we are living in a politician’s Paradise. Where else in the world is it possible for would-be governments to promise large tax cuts, massive increases in current and capital spending and big contributions to a rainy-day sovereign wealth fund – all at the same time? But at the other level, the nature of Paradise is to get lost.
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Nobody really knows whether we have the deeds to this glorious garden or are just temporary tenants in its verdant groves? Since we got here by accident, we could also be turfed out by accident. Even without the coming chaos of the Trump administration, there is an inherent instability in relying on corporation taxes for a quarter of public revenue (Denmark and Finland, for example raise seven and eight per cent of theirs this way) and on a mere 10 companies for over half of that yield.
Thus, the apple-licking election. In fairness to all the parties, they are faced with a genuine dilemma. If they don’t plan to spend vast amounts of money, we voters will be furious that we have all these resources to tackle the housing crisis and give us all the public services we expect as citizens of a rich country. And if they do plan to spend it, we worry that they are building a gleaming future on shifting sands.
And yet, even accepting this difficulty, it is quite weird to find that the most irresponsible party is the one that is supposed to be the most conservative: Fine Gael. Any sensible approach to the uncertainties of the public finances has to start by consolidating the parts of the tax base that are not dependent on the fortunes of American multinationals. This is what the smaller left-of-centre parties are proposing to do.
But Fine Gael is planning to do the opposite – it intends to take €1.2 billion out of the ordinary tax base every year. (By contrast, the supposedly reckless Sinn Féiners would take out less than half of that.) And on top of this, the party is patently understating the cost of maintaining current public services by around €5 billion a year. Not even its Fianna Fáil partners believe those figures to be credible.
Thus, we have Simon Harris warning us that Trump’s return creates major uncertainties for the Irish public finances – and at the same time proposing to place the biggest bet on the corporation tax gold mine continuing to produce ever bigger nuggets.
It doesn’t make sense – but the incoherence is kind of comprehensible. It is the cognitive dissonance that you get when the State’s short-term future is shaped simultaneously by wild optimism (it’s all golden!) and existential anxiety (it’s all pyrite!). We’re not just dealing with the usual softness of electoral promises. We’re in a very peculiar position where the political system itself has become dependent on windfalls. The State, perhaps uniquely in our current world, is banking on surprises being good.
The other story of a windfall, though, is the legend of Isaac Newton being inspired to develop the theory of gravity “by observing an apple fall from a tree”. Gravity, as he demonstrated, has a way of bringing things back to earth. We could do with a little more of it now.