There was never a magic Apple money tree
The loser in last week’s Luxembourg judgment was not the Irish Exchequer — it was an EU commissioner, writes Colm McCarthy
SINN Fein’s Pearse Doherty, whose party has taken charge of the Complaints Department for the duration of the new Government, managed to get the Apple judgment 180 degrees wrong last week.
The European Court concluded, in very explicit language, that the Apple company did not owe €13bn, or any other figure, to the Irish Government. But Pearse managed to befuddle his media interlocutors with a superior narrative better tuned to their attention span.
The €13bn was there to be taken from a dreaded multinational to help pay for the costs of the Covid pandemic, to build more houses, or whatever you are having yourself. The image conveyed to the less attentive viewers and listeners is that the folks in charge have taken a huge cheque and set fire to it.
Pearse and his colleagues would lodge the cheque and distribute the proceeds to the long-suffering voters, who could do with the money. Vote for change and no cheque will go uncashed.
This is the triumph of surface plausibility over the inspection of the facts. It is tragic that smart politicians are confident that they will go unchallenged with this level of codology.
Had Pearse gone to the trouble of Googling the European Court judgment, he would have noticed that the arguments of the Apple lawyers won the day. There is no cheque, and no free €13bn. His star interviewers had not pressed the Google button either.
Had the Irish Government declined to tog out for this fixture, Apple would have won anyway. The court concluded that no money was due in Ireland.
The loser in Luxembourg was not the Irish Exchequer or the long-suffering Irish voter. It was the EU commissioner, Margrethe Vestager, who chose the media-friendly line, watch me take on the dreaded tech companies. There are good reasons for European concern about the Big Tech outfits, but Vestager drew a bead on the Irish Government and she got it wrong. Apple were told by Vestager and her employers, the European Commission, to pay a vast amount of money to the tax authorities, their advisers objected, and the judges concurred. In a well-run outfit, Vestager would be considering her position. The straightforward shamelessness of politicians should bother everyone who cares about the content of the public debate. Deputy Doherty, who could easily be a front-rank member of the next Government, has no excuses.
The Irish Government did not win the case in Luxembourg, Apple won the case. The outcome would have been precisely the same had the Irish Government chosen not to join Apple in opposing the European Commission, which sought to impose a €13bn tax bill on Apple which the company resisted.
The judges decided that the Commission got it wrong, and the bill was not due. Apple did not dodge any tax in Ireland and the Irish State did not screw up. There was no €13bn left on the table, as deputy Doherty, who is not a fool and must know better, has sought to persuade the public courtesy of an asleep media. The narrative that the Irish Government, heavily borrowed and destined to expand further the national debt over the next few years, has chosen to pass on a large bunch of free money is a shocking abuse of the intelligence of the Irish public.
Pearse Doherty is not really the abuser. If there were no pliant and fast-asleep news outfits, there would be no politicians peddling codology.
There is an important sapling struggling to sprout at the back of all this, the Magic Money Tree in Merrion Square, just across the road from the Department of Finance, already deployed to fight the pandemic. This unloved little shrub has recruited a whole new host of admirers these last few months, its capacity to blossom expanding as the real economy contracts.
The pretence that the Irish economy has found the capacity to finance schemes deemed unaffordable before the economic disaster of Covid came along is testament to the destructive potential of an unserious press.
Vestager must now consider whether further dollops of taxpayer cash should be forwarded to the lawyers, happy no doubt to parse the judgment already delivered.
It would be nice if the Irish deputies at the European parliament hold the commissioner to account next time she appears before them.
Last week IFAC, the fiscal advisory council, released an unsurprising report on Ireland’s long-term budget and borrowing position. It concluded that there are off-balance-sheet liabilities that would worry any responsible person.
During the General Election, and later through the inter-party talks that finally yielded a new Government, the pension age became a vehicle for the competitive expression of political empathy. Essentially, politicians who care the most think that the retirement age should be reduced the fastest.
Since life expectancy has been rising in Ireland, as in almost all countries around the world, there has been a trend towards higher labour force participation among older people.
If you expect to live a little longer, it makes sense to keep on working for an extra year or two. Unless you are a politician, in which case you can promise earlier and earlier retirement, nice pensions, and please stop asking awkward questions about the money.
The IFAC report explains that a national exchequer cannot deliver high levels of retirement income if the population lives longer and longer unless adequate provision is made. The consumption requirements of the retired must be met from the current output of the working population, no matter what financial model is chosen. An Apple bonanza every year, forever, is the kind of money involved here.
The money needed to fund decent pensions is not available if everyone decides to clock off at 65 and then declines to expire on schedule.
The retirement age in Ireland, at which the ‘‘old age pension’’ becomes payable, was 70 until competitive politics got involved back in the 1970s. Then it became 69, an election loomed and then another, and the figure settles on 65.
Meanwhile, life expectancy continued to improve and is described as a ‘‘demographic crisis’’. There is really no need to employ experts at IFAC to figure out that retirement income for an expanding portion of retirees cannot be delivered at a constant retirement age.
The State has become the underwriter of all risk, including the ‘‘risk’’ that everyone stays healthy and lives longer. Or that Covid comes along and threatens to reverse this happy development.
The sums cannot be made to add up through an exercise in political imagination, an Apple a day.