Tax and Spend
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Ireland received a windfall of around $14 billion recently when a decade of litigation ended and the European Court of Justice found that Apple owed the country that much in back taxes and interest. “Ireland granted Apple unlawful aid which Ireland is required to recover,” the court wrote, according to the BBC.
The decision might bring an end to a remarkable era in Irish history.
As World Politics Review explained, American tech giants like Dell, Facebook, Google, IBM, Intel, Yahoo! and other international companies have flocked to Ireland since the country cut its corporate tax rate to 12.5 percent in the 1990s, resulting in massive investments and employing more than 400,000 people. This shift altered Ireland forever, transforming it into a fully developed country and vaulting the so-called Celtic Tiger into the global economy.
However, the European Union, of which Ireland is a member, was long angered by what it saw as unfair competition and a flouting of the rules.
Still, while Apple complained that the court was forcing Ireland to change the rules, EU anti-trust chief Margrethe Vestager welcomed the judgment. “Today is a huge win for European citizens and tax justice,” Vestager said.
Many Irish citizens were “flabbergasted” when the case revealed that their leaders had opposed taking the money, added Social Europe. The Eur 14 billion fine amounts to 16 percent of last year’s total tax revenue of Eur 88 billion. The company had benefited for over two decades, the commission said, from two illegal Irish decisions that had artificially reduced its tax charge to as low as 0.005 percent.
The decision will have more implications Experts at Brussels think tank Bruegal, for instance, feared the ruling might ironically solidify low-tax countries’ status as a tax haven because, while it punished the company for not paying sufficient taxes, it vindicated Apple’s aggressive tax strategy of profit-shifting.
In the meantime, the Irish are talking about what they want to do with the money. The Dublin metro could receive billions of euros to improve its rail network or the government could build seven children’s hospitals, or 40,000 very-much needed homes with the cash, wrote the Irish Sun.
An upcoming election on Nov. 29 will give them a chance to see whose plans are most popular.
Prime Minister Simon Harris called elections a year early in a bid to win an unprecedented fourth successive term in office for his center-right Fine Gael political party, the Guardian reported. Fine Gael, which is expected to garner 24 percent of the vote, is now in a coalition with another mainstream party, Fianna Fáil, which is polling at 21 percent. Opposition party Sinn Féin is expected to come in third with 18 percent.
Fine Gael candidates have called for spending more than $10 billion on new homes, the Irish Times reported. The party already had a plan to build more than 300,000 homes for more than $40 billion through 2030.
Sometimes, tax-and-spend works just fine, according to the polls. “We have the Shinners (Sinn Féin) on the back foot for a change and we need to keep them there,” a Fianna Fáil lawmaker told Politico.
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