THE REAL APPLE ISSUE
Overseas readers might be wondering what all the fuss is about regarding Apple and that tax bill the EU claims they owe to Ireland. Surely, you might think, it is a straightforward numbers issue and either they do owe that sum or they don't. After all, this was worked out between officials of the Irish Government and representatives of the company and agreement was reached between the two parties. Apple is forthcoming and upfront year-on-year about the sums involved and our lads can calculate what's due from what was agreed upon in the first place.
But the problem goes way deeper than that and to understand it, you need to know a little of Irish history and how our National psyche was developed. The Industrial Revolution, which took place from the 18th to 19th centuries, was a period during which predominantly agrarian, rural societies in Europe and America became industrial and urban. Industrialization marked a shift to powered, special-purpose machinery, factories and mass production. The iron and textile industries, along with the development of the steam engine, played central roles. It also saw improved systems of transportation, communication and banking
While the Industrial Revolution began in the UK, it quickly spread all over Europe, everywhere that is except Ireland. We never experienced that industrial revolution here and instead we remained poor and backward. In fact, we got the Irish famine, a period of mass starvation, disease, and emigration in Ireland which occurred between 1845 and 1852. So while the rest of the developed world made great strides forward, Ireland was devastated. Some estimates suggest that the population on the island stood at eight million before the famine but fell to as little as one and a half million seven years later. Millions managed to emigrate to the US, Canada, Australia and the UK but millions died back home also. The origins of the famine are complex and I won't go into that here, but while everyone else was taking a bold step forward, Ireland was forced to take a hundred steps back.
This country wandered into the twentieth century, poor, uneducated, under-developed and occupied by a foreign army. We fought a war of independence against the greatest power on earth at the time before gaining that independence and turning on each other in a bitter civil war. When the dust settled, most of that twentieth century was lived on the breadline by our parents and grandparents and the only depressing hope for the average Irishman was still emigration. Then in 1979, a young American lad called Steve Jobs came over to Cork and bought some land for a factory. He had a vision for a whole new industrial age based on emerging technology and unhampered by the spoils of an existing industrial base, the Irish jumped on his dream.
Today, people look at Europe and wonder why little Ireland hosts the European Headquarters of all the really big global names like Apple, Google, Intel, EMC, HP, Facebook and so many others. The answer is, this is our industrial revolution. We have wandered into the twenty-first century wired to the world. We worked hard to get educated, we have plenty to eat and spend, we are adaptable and flexible and critically, we were in the right place at the right time. Every one of those big names sat down with our people here and thrashed out a plan to settle here. Each would have had their own terms and conditions and somehow we were able to accommodate them all. You'd have to believe we did something right to make that happen.
The EU ruling in this light, threatens to de-rail our one and only industrial revolution. We have little in the way of natural resources over here that could yield jobs and a way of life for our citizens. At the same time, the leaders of all of the big companies here are watching the Apple tax issue develop and they must be thinking of alternatives for themselves should things go against the jewel in the crown for Ireland. As our noted economist David McWilliams writes this morning, "Let’s not forget, without multinational investment, Ireland would be Albania with brutal weather. The multinationals have completely transformed the capital base of the country, totally upgraded the type of careers that are available to people here and plugged Ireland into the global economy in a way that is impossible to quantify. In short, they — not the EU — are the key to Ireland’s economic modernity. The future is the smartphone, the technology and the Silicon Valley way of looking at the world"
It would be catastrophic blinkered thinking to demand the €13 – €19 billion from Apple at this point because some unelected Commissioner in Brussels says so. The tax arrangement reached by Apple on which this sum is based, has been changed for the last two years and is no longer in force. But whatever the arrangements were reached in 1991 and again in 2007 between the Apple and Ireland were agreed upon and formed a contract between both them and us. We signed up for it and are legally bound by it. It is not a moral issue but a legal one. Tim Cook has made the point that the tax figure being bandied about has been derived by respectively changing the original contracts to reflect 2016. The EU even acknowledge that neither Apple nor Ireland broke any laws. In fact, the kernel of their argument is that if such a deal was done with Apple, then it should have been offered to all the other multi-nationals based here. Remember, this is a non-competitive ruling, not a tax ruling. In essence, the EU position is that, if Apple can pay less than one per cent corporation tax in Ireland, then Google, Intel, EMC, HP, Facebook and all of the others must be offered that too, or else Apple have to cough up.
That makes it very complicated because each of the other large companies will have made their own deals with Ireland to cite themselves here. This morning, the CEO's of each of them will be considering the implications of what happens next in their own spheres of influence. Should Apple de-camp, they will be leading a charge of others in their wake and we Paddies will helplessly look on as our industrial revolution is taken from us to be replaced once again by isolation and poverty.
The McWilliams article today is not the first time he's suggested our future lies with the North Atlantic english speaking world of the UK, US and Canada while at the same time, our Government is hinting at a possible red letter day where this country must decide where its future lies. A core attraction of Ireland is our EU membership and access to the EU market and this must be borne in mind. But if that attraction should have the effect of devastating our economic infrastructure, then the price for remaining in the Union is too high. But from the EU perspective post-BREXIT, they have to consider the ripple effect of Ireland going to the polls to decide on its continued membership. Even worse, is the issue of US-EU relations on trade and the future of the world economy.
As things stand this morning, little Ireland is in the middle of a global shit-storm. The EU has positioned itself against us in one corner while Apple and the US is on our side. That is the real state of play and thirteen billion or whatever it really is, is a sideshow. On the table is our precious industrial revolution with America wanting us to continue and progress it and Europe wanting to take it away.
It's that serious!