Taxing problem of how to keep coalition parties working in unison
What started the week as a potentially large hurdle could benefit the Government as a whole, but there may yet be a cost, writes Eoin O’Malley
THE former Taoiseach Albert Reynolds observed on keeping governments going: “You cross the big hurdles, and when you get to the small ones, you get tripped up”.
He discovered that any protruding root on the path has the capacity to bring even a strong government with a large majority — as his had — crashing down. He didn’t understand that trust was a big issue for holding government together, and trust can be lost on even the smallest of issues.
The Fine Gael-led minority coalition is a much less steady beast. And trust appears to be low. Faced last week with a €13bn decision, immediately two questions came to mind. How would Fianna Fail react, and what would the Independent Alliance do?
At one stage in its history, Fianna Fail would have jumped at the chance to challenge the government to ‘take the money’, an option some seem to think is open to us. It’s a sign of Fianna Fail’s political maturity that it issued a measured statement to seek clarity on the legality of the Commission decision. It’s also a sign that the party’s recovery isn’t complete. Fianna Fail needs to regain a reputation for economic competence, and promising to spend the money would have raised suspicions in the electorate. This also signals that the party doesn’t want an election yet, so we should expect the Budget to pass this autumn.
Fairly or not, we expect that the Independent Alliance wouldn’t display measure or maturity. Some of the members of the Alliance are known for speaking first and thinking later. Some have also signed up to the idea that Ireland is corrupt and run by a political/business alliance. The accusation that the state had done a sweetheart deal with a large multi-national to avoid paying taxes due to Ireland fits that narrative. Coupled with the idea that we could get our hands on €13bn might have seemed irresistible to the Alliance — €13bn buys you a lot of cardiac care in Waterford.
Asking its TDs to sign up to an appeal that can be framed to voters as a government protesting that it shouldn’t take much needed revenue from a large multinational accused of not paying fair taxes, well, it’s a tough ask. Good friends have fallen out over less.
There was a real possibility that the Government could collapse on this. If the Independent Alliance was to leave, that makes an election more or less certain. But it’s not an election anyone really wants, mainly because it’s unlikely it would produce a substantially different result to the one we had in February.
That possibility might have focused minds. Fine Gael still hasn’t sorted out its leadership issue — it could have found itself facing an election with Kenny as leader. The Independent Alliance would have proved right anyone who wondered about its ability to stick to the task. So it’s no surprise that positions softened and a solution was found.
The inability to make an immediate decision in Cabinet last Wednesday shouldn’t have surprised us as much as it did. The Independent ministers couldn’t have appeared to toe the Fine Gael line quite so quickly and easily. And to be fair to them, Fine Gael announced the Government decision as a fait accompli — without first consulting with the Government.
That solution could never be the same as the accommodation ‘agreed’ on the Fatal Foetal Abnormalities Bill. Essentially the agreement was to ignore the split in the Cabinet. That was reasonable because Enda Kenny was trying to portray a non-decision as a Government decision, based on portraying the AG’s advice as a judicial statement. The members of the Alliance who supported the Bill weren’t voting against a Government Bill. If the Government does not take a stance, Government ministers are not bound to vote together.
In the decision to appeal the Commission’s ruling, the Government made an actual decision, and the Independent Alliance and Katherine Zappone, who also had misgivings, had to at least implicitly support the appeal. The ‘agree to disagree’ style solution was not available.
Another thing we can see in some of the members of the Independent Alliance is oldfashioned common sense. Some of the members appear to be good constituency politicians capable of doing deals, and delivering on them. They aren’t as flaky as they sometimes appear, and they’re anxious to show that Independents can ‘do government’. They want to be able to work with Fianna Fail after the next election.
A solution had to be found. And it was found.
The idea that Ireland could just take the €13bn and spend it is ignorant of basic facts, and presumably the independent ministers have had this explained to them. But the idea that multi-national corporations don’t pay their fair share of taxes is a plank of the arguments of increasingly successful antiestablishment politicians the world over.
Fine Gael spent the last week emphasising the legality of the Commission ruling, and the need to protect Ireland’s reputation. The agreement in Cabinet last Friday will get Dail approval, but, possibly more crucially, offers a statement of intent on the taxation of multinationals.
It was naive of the Independent ministers to agree to a ‘review’ — the word screams FUDGE — but the review could lead to people starting to question the viability and usefulness of some of the more obscure tax arrangements that incentivise brass-plating, inversions etc.
The review could actually lead to a change in policy, which would allow the Independent Alliance to claim a real victory, in an area that matters to its voters. And crucially, everyone avoids an election.
What started the week as a potentially large hurdle, could be one that benefits the Government as whole. But we don’t know if there was a cost in terms of trust. The events remind us of the fragility of the Government. It still appears to lack the mechanisms to communicate between the groups that were there in ‘normal’ coalitions with party leaders.
Anything, big or small, could still emerge from the undergrowth to trip up this Government.