View from Dublin: EU dig­i­tal sales tax win just first round in the fight

Belfast Telegraph - Business Telegraph - - News - BY RICHARD CUR­RAN

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.

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