The Government, in disarray, has cobbled together a compromise that will allow it to appeal against an EU Commission ruling that Apple owes it €13 billion in back taxes while, at the same time, offering an undertaking that corporate tax arrangements will be more transparent in future.
A special meeting of the Dáil will debate these matters next Wednesday when Sinn Féin, Anti-Austerity Alliance and others are likely to condemn the decision and demand the money be used for necessary social spending.
Ireland was faced by a lose-lose situation once the EU Commission found it had facilitated Apple in avoiding practically all tax on its European earnings. Appealing the ruling will, at best, provide a fig leaf for past "mistakes" and keep faith with one of the wealthiest companies in the world; not appealing would abrogate an agreed tax arrangement and generate uncertainty involving other multinational corporations.
Minister for Finance Michael Noonan carefully prepared for this outcome and offered comfort to Apple. But nobody told Independent Ministers. When a preliminary finding was made against Ireland in 2014, the last government began to get its house in order.
Against the backdrop of OECD efforts to close tax havens and ensure multinationals paid a reasonable amount of tax, Mr Noonan admitted mistakes had been made and ended to the so-called “double-Irish” tax avoidance measure used by Apple and other multinationals.
Bloomberg estimated Apple faced a $19 billion tax bill. But the government believed its remedial action and determination to challenge any formal ruling would greatly reduce any award. It was wrong. The €13 billion ruling and public demands that the money be spent on hospitals and housing almost unhinged an already shaky Government.
Independent Ministers refused to support an appeal in the absence of a Dáil vote and a review of the corporate tax system. It was giving them political cover and in the certain knowledge Fianna Fáil – on whose watch the unorthodox tax arrangements had been made – would provide necessary support in the Dáil.
The confrontation soured relations within Government even further. The unmistakable message is: nothing should be taken for granted where Independents are concerned, notably in relation to the coming Budget. At the same time, Fianna Fáil has grown more assertive in demanding additional spending while, within Fine Gael, there is an expectation Taoiseach Enda Kenny may finally embark on his lap of honour.
Uncertainty is as unwelcome and as damaging to confidence within politics as it is in business. Rather than squabble over a potential tax windfall in a distant, uncertain future, politicians should consider how they might resolve existing problems and find a more effective way of doing the critical business of governing.