View from Dublin: EU digital sales tax win just first round in the fight
JUST a week ago commentators (including myself ) described how Paschal Donohoe had become isolated in opposing France’s idea of a digital sales levy on tech giants. We believed he would be practically alone among EU finance ministers during the week, in defiance of a groundswell of opinion that a digital tax on sales was the way to go.
Instead of being boxed into a corner, our feisty finance minister put the gloves up and saw bigger opponents back away. Even the Germans were in no hurry to see an Eu-wide levy introduced.
Instead they want to wait for an OECD report which should shed new light on the most pragmatic way forward. This is in line with the Irish position. A big win for Paschal? Not quite. The French won’t be happy. (Perhaps they’ll get us late into the night as the final touches are agreed on Brexit.)
The digital tax issue has not gone away, either, and individual countries are going ahead with their own measures. However, the damage the Irish government feared could be done by an EUwide levy is avoided for now.
At the same time it has been reported that the European Commission is considering conducting a tax probe into Facebook’s Irish corporate structures. It isn’t clear whether a full investigation will take place, but reports suggested the EC had sought documentation relating to tax structures.
Once again, at the very least it brings Ireland’s corporate tax policies into the spotlight. Bear in mind the practices for which Apple Inc was fined by the EC were historical as the various loopholes it used had already been closed off in Ireland.
Facebook has faced criticism before when it comes to how much tax it pays, but it is full steam ahead when it comes to its investment in Ireland. Facebook announced it is moving 2,275 of its Dublin staff from Grand Canal Dock to the AIB Bankcentre building in Ballsbridge. The difference is, its new offices could take up to 5,000 more employees.
This marks a huge commitment to Ireland and not one that could be unpicked in a hurry. It is deeply ironic that just as Ireland has faced more bad publicity around its corporate tax rules and had to close off more loopholes, actual corporate tax receipts continue to go through the roof.
Not even Brexit is eroding the corporate tax take as FDI continues apace. The real challenge for the economy, and the government, is where all of these workers are going to live. This isn’t just about the housing or rental crisis; it is about public transport, parking and congestion.
Before the crash the Fianna Fail government had a smart economy blueprint in which IDA Ireland only pursued higher-value jobs in FDI projects. The economic crash meant that policy had to change. We needed an emergency jobs plan for a country on life support. That meant attracting the maximum number of jobs possible.
Call centres came back in vogue. Anything that moved on the jobs front was hoovered up. And it has made a big difference — especially in the main cities.
It is getting close to a time now when the next jobs policy might revert back to fewer but higher-value jobs as Dublin housing stock and infrastructure creaks.