by Frank Schnittger
Wed Sep 8th, 2021 at 03:58:41 AM EST
Eoin Drea, a researcher at the EPP affiliated Wilfried Martens Centre for European Studies in Brussels, has a go at the "The chattering Irish Europhile class" in his piece entitled "Ireland is no longer viewed as a credible voice on key issues in Brussels"(Sadly, subscriber only). In it he castigates Ireland's failure to sign up to the nascent OECD corporate tax reform involving a minimum 15% tax rate but totally misreads the Irish Government's reason for doing so.
Almost everyone in Ireland regards global corporate tax reform as desirable and inevitable and the proposed 15% tax rate is hardly a precipitous increase on Ireland's current rate of 12.5%. But as always, in tax matters, the devil is in the detail, and that detail will be determined in large measure by Biden's slim majorities in Congress, all the more so as many Democrats are as sceptical as Republicans about anything that might displease their major donors.
In the meantime, there has been almost no debate on what other measures smaller peripheral states can take to compete with larger central states for foreign direct investment on relatively equal terms. Without a tax advantage, all the major US corporations which have located their European HQ's in Ireland would instead have located their HQ's in Germany, France or the Benelux countries, and Ireland would be little more than a theme park for tourists interested in quaint provincial customs.
There is no denying that much higher global corporate tax rates are an urgent requirement if growing global inequalities are to be addressed. But a one sided policy which advantages the already rich and powerful central states at the expense of everyone else is not a solution any Irish government can be expected to take the lead on. Without much greater and permanent EU fiscal transfers to level the playing field between rich and poor, centralised and peripheral EU member states, small member states will have no incentive to reform what are, globally, very dysfunctional tax policies.
What global tax reforms eventually emerge will be determined by the major players, the US in particular, and by countries such as the UK, Germany and France. Nobody in Ireland is under any illusion that we will have any great influence on the final outcome, one way or the other. That does not mean we are in any hurry to dismantle an economic model which has worked well for us in he past until there have been at least some effective proposals, at EU level, to enable smaller peripheral member states to encourage their economic development by other means.
Eoin Drea does Ireland a disservice by not even considering those concerns, and by framing the problem as entirely one of Ireland not doing the right thing by Brussels. That is the sort of bombast that fuelled Brexit sentiment in the UK, and could yet fuel Euroscepticism in Ireland. In any case, his piece allowed me to have some fun at his expense, in a letter published by the Irish Times today:
`The chattering Irish Europhile class'
A chara, - As a self-confessed member of the "chattering Irish Europhile class" so disparaged by Eoin Drea ("Ireland is no longer viewed as a credible voice on key issues in Brussels", Opinion & Analysis, September 6th), I take umbrage at his implicit suggestion that Ireland should transform itself into a vassal state ready to ask "How high?" at every suggestion that we should jump in accord with the latest wheeze coming out of the EU institutions and think tanks.
Indeed, it is the mark of a mature, self-confident, and democratic sovereign state that it is not afraid to differ from its partners when the national interest demands it.
There is never a suggestion that Paris or Berlin should jump every time Brussels comes up with a bright idea, so why should Ireland?
With 75 per cent of our foreign direct investment coming from the US and UK, it is not surprising that our economic policies are more influenced by "Boston rather than Berlin" -- which contributes just 5 per cent.
Mr Drea appears to believe that tax harmonisation is the only EU integration policy worth discussing when that is explicitly retained as a national competency in all the EU treaties we have signed up for.
Perhaps the EU could add more value to the lives of ordinary citizens by pushing for more integrated public healthcare, pharmaceutical procurement, and educational opportunities rather than further encroaching on what few sovereign powers remain with member states?
In reserving its position on the corporate tax reform until the US Congress has had its say on the final shape of the reforms, Ireland is doing no more than refusing to buy a "pig in a poke". It would be outrageous for our Government to abandon the biggest single competitive advantage we have without knowing precisely what alternative arrangements will apply.
If this displeases the panjandrums of Brussels, then so be it. It is not our Government's job to pursue the national interests of Germany or France. They are more than capable of doing so for themselves.
Mr Drea would do well to remind himself that Ireland is a democracy well able to take an independent view of its own national interests. If he is looking for member states which undermine European ideals, he need look no further than Hungary or Poland. If he is looking for tax avoidance on an industrial scale, he might find a closer look at Dutch and Luxembourgian tax practices instructive. Irish corporate tax laws and rates need to change and will do so, but in a manner which is consistent with our Constitution and national interests.
Insulting our national leaders or our "chattering classes" will get him and Brussels nowhere. - Yours, etc,