Musings on our Shared History
Stephen Daly is currently a DPhil candidate and Tutor at Lincoln College, Oxford University. He holds a BCL (International) from University College Cork and an LLM (Corporate Law) from University College London. In this letter, he explores the relationship both the UK and Ireland have with the taxation of multinational corporations.
Dear Editor,
It has been much the repetitive mantra of late that Ireland and the UK have a ‘shared history’. Recent events in Ireland relating to tax however demonstrate both symmetries and asymmetries of this ‘shared history’. Whilst the introduction of new taxes is met with the same disdain in both jurisdictions, the relationship with multinationals offers an interesting distinction.
It is fair to say that the Irish public has not warmed to the idea of a Water Charge. This levy has spurred a series of demonstrations, with more set to occur. In December last year, during the second stage of the Water Services (No 2) Bill (2013) 123 in the Dáil, Luke ‘Ming’ Flannigan famously invited Minister of State Fergus O’Dowd to drink a glass of ‘piss’ water he had retrieved from Castlerea in Roscommon. Sinn Féin’s Mary Lou McDonald, elsewhere, has written that, ‘We are committed to fighting water charges as we believe that fresh, free-flowing water is a basic human right.’
Much the same resistance accompanied the introduction of the Poll Tax by Margaret Thatcher’s Tory government in the late 1980s. The Poll Tax was a Community Charge which was levied at a fixed rate per adult, with reductions for the unemployed, disabled and students. There was considerable anger at this new tax. A series of protests were organized, with some famously turning into riots.
Such symmetry between Ireland and the UK as regards backlash against additional charges should come as little surprise. Indeed, since time immemorial, it has been a cardinal rule that the public will not take kindly to new taxes. As far back as 1776 Scottish philosopher Adam Smith reflected upon the fact that novel taxes inevitably generate discontent:
Every new tax is immediately felt more or less by the people. It occasions always some murmur, and meet with some opposition. The more taxes may have been multiplied, the higher they may have been raised upon every different subject of taxation; the more loudly the people complain of every new tax, the more difficult it becomes to either to find out new subjects of taxation, or to raise much higher the taxes already imposed upon the old.
This dissatisfaction is often aggravated by the perception of unequal treatment: that not everybody is paying their fair share in the new circumstances but rather that what is being observed is the working class being squeezed to the benefit of the wealthy.
The UK has borne witness in recent times to such aggravated discontent. The perception of inequality came in the form of contrast between austerity measures affecting the populace and the ‘Sweetheart’ deals afforded to large multinational corporations. During the course of 2010 and 2011, it came to light that HMRC (the UK tax authority) had arrived at large settlements with both Vodafone and Goldman Sachs. A backlash ensued, fuelled in particular by protest groups who were apoplectic about the apparent benevolent treatment. For instance, the group UK Uncut forced the closure of up to 30 Vodafone stores by virtue of its protests and subsequently took a judicial review action against HMRC in relation to the Goldman Sachs deal.
However, such outspokenness in relation to inequality of treatment, with regard the tax affairs of multinational companies, has not travelled so well across the Irish Sea. This is particularly interesting in light of the six continuous years of austerity which have been inflicted to date. To this end, the accusation by the European Commission of a ‘Sweetheart deal’ between the Irish Revenue Commissioners and Apple has received a much more muted response in Ireland. The Commission has claimed that the Revenue provided selective treatment to Apple, thereby breaching EU State Aid rules. In effect, this amounts to the charge that Apple paid too little tax in Ireland.
Perhaps this contrast in public mood serves to underline a cultural difference between Ireland and the UK generally as regards relationships with multinationals. Before the US Chamber of Commerce in March of this year for instance, Taoiseach Enda Kenny remarked that it was the Government’s goal to ‘make Ireland the best small country in the world for business.’ Indeed, Barrister Kieran Corrigan presciently picked up on the Irish attitude to businesses and taxes back in 2000, noting the ‘public inclination towards [State-sponsored] tax avoidance.’
Whilst there is undoubtedly a shared history between Ireland and the UK, it is not beyond the scope of asymmetries. Whilst the introduction of novel taxes produces an equivalent discontent, a corresponding anger towards large businesses is largely absent.
This is not to promote or criticise the prevailing Irish attitude to multinational companies, but merely to outline the curiosity in the contrast. It is notable that a subsequent report into the settlements with Goldman Sachs and Vodafone in the UK found the deals to be ‘reasonable’. Only time will tell then whether the relative Irish reticence is justified.
Is mise le meas,
Stephen Daly
