The European Union is telling Ireland that they’ll only get a share of the money pot if they stop allowing international corporations to avoid paying into the money pot. This is a bargain that Ireland would do well to reject – leaving business be is likely to lead to a better economic outturn than depending upon grants from the Brussels bureaucracy.
It’s also evidence that the bureaucracy wants to insist upon monopoly. By insisting that business cannot avoid taxation because the rules are the same everywhere the rates charged can be screwed up. Like any monopolist the absence of choice enables the extraction.
But more than that it’s evidence that Brussels is many years behind reality:
The European Commission is pushing for Ireland to change its tax rules in exchange for a slice of recovery funds meant to help economies bounce back from Covid.
Each nation in the European Union is in line for a share of the €750bn (£652bn) Next Generation pot, but first must have its economic proposals signed off by Brussels in an attempt to ensure the money goes on projects that enhance long-term prosperity.
According to a document seen by The Irish Times, the Commission wants Ireland to increase taxes as part of the plan. The country’s low tax rates have encouraged international businesses such as Apple to set up operations in Ireland, boosting its economy but also angering some European rivals who see this as unfair competition.
Of course it’s beneficial to not pay taxes in, say, France. Because France is more likely to piss the money away than somewhere more sensible. But the actual driver for avoiding tax here in Europe is that if that is done then the system used – used – to allow it not to be taxed at all.
Well, almost. If an American company got it out of Europe then the cash remained untaxed as long as it didn;t take it into the US. Which isn’t all that great, because it couldn;t go to shareholders, which is the point of being in business in the first place. But non-taxation was possible.
Now non-taxation isn’t possible. The Trump reforms meant that some tax had to be paid even if that cash remained offshore. The likely Biden reforms say that it will pay tax at the usual rates even if it remains offshore.
So the incentive to shift profits has rather declined. Because such shifting doesn’t lead to non-taxation. That is, the problem is now solved. There’s no reason to beat on Ireland any more. Tax will be paid on profits. And?