Ireland has accidentally entered the tax garden of Eden. We could suddenly be kicked out – The Irish Times

On By Online Niel

Windfall is a delightful word, smelling of mist and soft fruitiness. It has a delicate, poetic character, unsuited to the rough and tumble ways of electoral politics. And yet it is the defining word choice. There is something suitably surreal about the Irish way POLICY is based on such a lush metaphor – what do we do with all these golden apples that fall from American corporate money trees in our little Eden?

Seán Ó Faoláin he once called the Irish a nation of apple-lickers, meaning that if we had been Adam and Eve in the biblical parable, we would have been too shy to bite the apple and would have licked it instead. This became all too true when instead of the apple of knowledge we were first offered Apple’s unexpected €13 billion unpaid tax bonanza.

Ireland was officially too terrified to bite, worried that there might be a satanic snake lurking in that rich tree, waiting to bite us back. But we all licked the apple, salivating at the tantalizing thought of such riches.

And now, even those billions are but a fraction of the greatest prosperity. The return to the state from corporate taxes increased fivefold between 2011 and 2021. And it’s still going up. In 2021, it reached an astonishing level of 15 billion euros. And then we moved into uncharted territory far beyond awe. the current Finance Department It is estimated to reach €37 billion by 2030 – 10 times the income tax yield in 2011.

Or maybe not. Maybe this future is a mirage. May be Donald Trump will take everything The problem with being in the tax garden of Eden is that we know how that story ends – you’re thrown out naked into the harsh world and have to earn your living by the sweat of your brow.

( Key decisions now facing Donald Trump that will have a big impact on the Irish economy )

The heart of the dilemma is that we won the lottery without even picking the numbers, or, to nationalize the metaphor, we found the pot of gold at the end of the rainbow without even trying to catch the leprechaun. The whole thing has an air of accident. We are not dealing with a situation created by the State through careful planning. If anything, it’s the opposite: this is a jackpot we tried not to hit.

The state did not want to take it Apple money. He fought a rearguard action against the reforms in the international corporate tax regime that actually led to our current fortunes. He tried everything not to raise the corporate tax rate to 15 per cent – ​​a change which (all else being equal) will give us a bumper crop for the duration of the next government.

Hence the strangeness of the elections. At one level, we live in a politician’s paradise. Where else in the world is it possible for would-be governments to promise big tax cuts, massive increases in current and capital spending and big contributions to a sovereign rainy-day fund – all at the same time? But on the other level, the nature of Paradise is to get lost.

( Which party has the best plan for Apple’s billions? )

Does anyone really know if we have the deeds of this glorious garden or are we just temporary tenants in its verdant plantations? Since we got here by accident, we might as well be abandoned by accident. Even without the coming chaos of the Trump administration, there is an inherent instability in relying on corporate taxes for a quarter of public revenue (Denmark and Finland, for example, raise seven and eight percent of it this way) and on just 10 companies . for over half of this yield.

Thus, the apple-licking choices. In fairness to all parties, they face a real dilemma. If they don’t plan to spend large sums of money, we voters will be furious that we have all these resources to deal with the housing crisis and provide all the public services we expect as citizens of a rich country. And if they plan to spend it, we worry that they are building a bright future on shifting sands.

And yet, even accepting this difficulty, it is quite strange to find that the most irresponsible party is the one which is supposed to be the most conservative: Fine Gael. Any sensible approach to the uncertainties of public finances must begin by strengthening the parts of the tax base that are not dependent on the wealth of US multinationals. This is what the smaller centre-left parties are proposing.

But Fine Gael plans to do the opposite – it plans to take €1.2bn out of the ordinary tax base every year. (Instead, the supposed reckless Sinn Féiners In addition, the party clearly underestimates the cost of maintaining current public services by around €5 billion per year. Not even his Fianna Fáil partners believe these figures are credible.

Thus, we have Simon Harris warning us that Trump’s return creates major uncertainties for Irish public finances – and at the same time proposes to place our biggest bet that the corporation tax goldmine will continue to produce bigger and bigger nuggets.

It doesn’t make sense – but the incoherence is somewhat understandable. It’s the cognitive dissonance you get when the short-term future of the State is simultaneously shaped by wild optimism (everything is gold!) and existential anxiety (everything is pyrite!). We are not just dealing with the usual blandness of election promises. We are in a peculiar position where the political system itself has become addicted to misunderstandings. The state, perhaps unique in our current world, relies on good surprises.

The other story of a windfall, however, is the legend of Isaac Newton inspired to develop the theory of gravity “by observing an apple fall from a tree.” Gravity, as he demonstrated, has a way of bringing things back down to earth. We could do with a little more now.