Sweetheart deal or just good business?

It sounds utterly bizarre, but the Government has this week ended up with a windfall of billions of euro that it just doesn’t want to take.

The money could be used as a once-off for capital spending to alleviate the housing and homelessness crisis, deficits in the health service, transport infrastructure, and to address a shortage of school buildings.

But no, the Government will tell the EU Commission ‘no thanks, it’s a kind offer, but we don’t want it. We’d rather do without the money, thank you very much’.

Of course, the windfall we are talking about is the EU Commission’s investigation as to whether Ireland’s tax arrangements with software and tech giant, Apple, were essentially a sweetheart deal.

Technically, the investigation examined whether a deal was struck with Apple that allowed it pay a ridiculously low percentage of tax. That, the Commission has found, constituted a State aid where the Government policy favoured an individual company or sector, with no similar deal being offered to rivals. In other words, it was inherently anti-competitive. And anything that distorts the market in Europe is completely verboten, as far as the EU Commission is concerned.

The whole arrangement came to light during Congressional hearings in the United States, where it was disclosed that Apple was paying a pitifully small amount of tax on the multiple billions of dollars of profit it was making in the EU each year – some claimed it was as low as 1%, but that was never verified.

It is a magnificent windfall. But the Government doesn’t want it. No sir. Not at all. Indeed, it will appeal the decision.

In a Dáil response to Pearse Doherty of Sinn Féin in June, Minister for Finance Michael Noonan said: “I remain of the view that there was no breach of State Aid rules in this case and that the legislative provisions were correctly applied.  In the event that the Commission forms the view that there was State Aid, Ireland is entitled to challenge this decision in the European Courts.  As the Government has already indicated, we will take that course of action, if necessary, to continue to vigorously defend the Irish position.”

In fairness, the deal was not struck by the present government but by a previous administration. To ordinary people – in other words, those who are not involved in the tricksterish world of finance – it would have come as a shock to learn about this situation.

For more, read this week’s Connacht Tribune.