Ireland Inc and its fawning government doth protest too much. For the umpteenth time, this country has been tax-slut-shamed on the world stage only for Michael Noonan, the finance minister, to dismiss it with sneary superciliousness.
On Monday, Oxfam, one of the most respected charities fighting poverty, published a list of the 15 worst tax havens on the planet, in a report entitled Tax Battles: The Dangerous Global Race to the Bottom on Corporate Tax. Ireland was ranked sixth, wedged between Singapore and Luxembourg. Bermuda, the Cayman Islands and the Netherlands came first, second and third. Asked by a journalist for his response to the report, Noonan said it was “so wide from what the actual factual position is” that “nobody will take them seriously”.
Noonan’s denial was as convincing as if he had pleaded that Ireland couldn’t grow enough frangipani trees to qualify as a tax haven.
In the Dail, Enda Kenny took up the mantra of point-blank denial. “We have not and never will be a brass-plate location,” he proclaimed, evoking memories of the Isle of Man circa 1981. By his reckoning, Ireland did “not meet any of the international standards for being considered a tax haven” but, conversely, had been “at the forefront” of international tax reform. “I completely refute allegations of Ireland being a tax haven,” said the taoiseach.
Well, in the immortal words of Mandy Rice-Davies during the Profumo affair: “He would, wouldn’t he?”
Let’s see what Kenny’s and Noonan’s counterparts on Oxfam’s naughty step have had to say in their defence.
Everard Richards, Bermuda’s deputy prime minister, rejected his country’s appearance — in first place — on the list, saying the report contained “substantial errors” and added that Bermuda had co-operated with international attempts to combat tax avoidance.
In the Cayman Islands, Wayne Panton, the minister of financial services, said there were “critical errors” in the report and his country had adopted various measures to ensure transparency and the exchange of information between countries.
In the Netherlands, the ministry of finance said it was “actively co-operating with international initiatives to tackle” multinationals shifting their profits around the globe to minimise their tax bills.
And on and on it goes down through the list; purported tax haven after tax haven protesting its innocence and claiming, obversely, to be spearheading a global clean-up of avoidance systems that deprive destitute countries of about $100bn in tax revenue every year.
Ireland has gained quite the reputation as a tax wide boy. In 2013, a US Senate committee singled this state out as a tax haven. In 2015, the UN’s special rapporteur on extreme poverty said Ireland was prominent among tax havens. This year, the EU slapped a €13bn bill on Apple for taxes it eluded courtesy of what was deemed illegal state aid by Ireland. In September, Brazil added this country to its list of tax havens.
As recently as December 10, The New York Times reported extensively on Wall Street companies avoiding massive taxes in the Irish property sector. It explained the “set-up promoted by the Irish government” that allows for “a bit of tax magic” that makes those companies’ profits “seem to disappear”.
How, therefore, can Kenny, Noonan and Ireland Inc continue to deny what is blindingly obvious to other countries? Are they relying on Cardinal Desmond Connell’s famous mental reservation? Have they got their fingers crossed behind their backs while they utter their denials?
The answer is, it’s semantics, stupid. It all depends on how you define a tax haven. According to the Merriam-Webster definition, it’s “a place where people go to live and companies go to operate in order to avoid paying high taxes”. By that measure, Ireland is tried and convicted.
The Oxfam report describes tax havens as territories which “have intentionally adopted fiscal and legal frameworks allowing non-residents to minimise the amount of taxes they pay”. The report assessed three elements of tax policies: corporate tax rates; tax incentives; and a lack of co-operation with international efforts against avoidance. That definition also indicts Ireland, with its phenomenally low 12.5% corporate tax, its recently closed “double Irish” and section 110 loopholes — replaced by Icav and Iref shelters — and the government’s obduracy over the Apple ruling.
In contrast, Ireland operates according to a self-satisfied developed-world definition of tax havens. The EU is planning to publish a tax blacklist of countries, which will exclude its own member states. Nor does it intend listing countries with a 0% corporate tax rate, meaning Bermuda might not feature.
A separate G20 blacklist due to be published next year “will be weaker still”, Oxfam says, because “it only looks at criteria related to financial transparency and ignores many key polices that facilitate corporate tax dodging”.
Kenny cites in Ireland’s defence the transposition into law, a year late, of an EU directive on information-sharing about tax determinations — but this was only done as a concession to secure the support of independent minister Katherine Zappone for the cabinet decision to appeal the Apple ruling. It is notable that Zappone has said publicly she does not expect the Apple decision to be overturned, indicating that, while the cabinet may be singing from the same hymn book, it is not of one faith.
Ireland has an extraordinary record for compassion. Its people have consistently been among the world’s highest per-capita contributors to charitable causes. Its NGOs and missionaries have been feted in far-flung lands. That the sovereign state has acquired a reputation as a tax pariah must be a discomfiting contradiction.
It is also an economic one. Surely it would be more effective than simply handing out grant aid to developing countries were Ireland to stop facilitating the tax avoidance that, according to Oxfam, creates “extreme” poverty in those countries.
If our government is not willing to defend the rights of other exchequers to their tax income, it might, at least, consider the good of its own people. Tax injustice has its consequences within Ireland’s borders. Imagine what tax forgone to multinationals could do for the 6,000 homeless people in this country and the 140,000 people depending on the St Vincent de Paul this Christmas, the 200 people sleeping rough in Dublin, the 1,000 people being fed every day at Brother Kevin’s Capuchin Day Centre.
In Oxfam’s words: “There are no winners in the race to the bottom.”