Brexit: Accelerating the Drive Toward Corporate Tax Harmonisation?

Brexit means the UK is no longer bound by EU Directives aimed at tackling tax avoidance and aggressive tax competition, an issue that has become a high salient electoral-political issue among citizens in EU member states.

The UK will not be bound by the forthcoming Anti-Tax Avoidance Directive (which contains five legally binding anti-abuse measures that all member-states must implement by 2019); the Directive on Administrative Co-Operation (aimed at improving cross border transparency and the exchange of information); and they will most certainly not be bound by the proposed Common Consolidated Corporate Tax Base (CCCTB), should it be agreed and implemented by the Council.

The UK was the loudest and most vociferous opponent of the CCCTB, and successfully blocked its implementation in the Council in the past. Whilst the “unanimity” rule still applies to fiscal policies, which means Ireland still has a veto in the Council, there can be no doubt Ireland has lost its biggest ally in arguing against a common consolidated tax base.

In the context of uncertainty (and in the absence of a CCCTB), most legal-accountants are correctly pointing out that Brexit provides an opportunity for Ireland to take advantage of the present international tax situation. UK firms no longer benefit from those Directives aimed at the Single Market. Brexit means UK firms will no longer have a “one stop shop” for their EU trades. Many have an incentive to merge their businesses to an Irish subsidiary. Some will also consider moving their EU parent companies to Ireland, to ensure they can continue to transfer prices.

Of course, in the medium-to-long run, everything depends on the EU-UK negotiations. As it stands, it would appear that some sort of Swiss+ type deal is the most likely outcome, with priority accorded to a sectoral-industry specific deal for London finance, including the question of passporting and equivalence. Whatever the outcome, a Swiss+ type deal (or the WTO default) will give the UK much greater scope to adopt an aggressive corporate tax regime, which, whilst subject to WTO and OECD rules, would encourage a regulatory race to the bottom in Europe.

This is not good for Ireland.

Further European integration reflects the direction of travel for the remaining EU member-states. This is particularly the case for those countries in the Eurozone (with growing calls for a Eurozone Treasury/Budget and even parliament). Macron and Merkel, and their finance ministers, have made it perfectly clear that the Franco-German preference is for more integration. They know the risk associated with turning the UK into the Singapore of northwest Europe, and they have publicly declared that the harmonisation of corporate income tax systems will be central to their drive toward more integration.

The Commission fully support this Franco-German preference for greater tax harmonisation, which is best reflected in their recent proposal for a CCCTB. It is no surprise that Pierre Moscovici put it back on the agenda directly after the Brexit vote, despite it being defeated previously. Anyone who spends time in Brussels will know that the CCCTB is now a core priority for the EU, and they will persist until it is eventually agreed.

The new CCCTB proposal is slightly different to the previous proposals. It will take place over two stages. The first stage will seek to agree a single set of EU rules to calculate the profits of MNC’s in Europe (i.e. establishing the common tax base). The second and more controversial stage will be aimed at agreeing how to divide up the profits, which is the taxable income given to member-states (based on assets, labour and sales). Ireland will lose out as MNC’s based in Ireland will no longer be able to transfer the profits of their sales in other countries back to Ireland.

The second big change is that the CCCTB will be mandatory for all firms with revenue in excess of 750 million, and that there will be an R/D scheme aimed at supporting small and medium sized enterprises. But perhaps the biggest change is that the CCCTB is now being framed to explicitly tackle corporate tax avoidance in Europe. The Commission have launched a concerted campaign aimed at EU citizens to win support.

Brexit will accelerate the drive to harmonise corporate income tax systems, and the probability of this being successfully passed has increased, not least because of a change in the number of votes. The EU Council now looks completely different: the votes are significantly stacked in favour of the Franco-German alliance. But on CCCTB, qualified majority voting cannot be used, as unanimity is required. However, what this means is that Germany and France will seek to win Irish, Danish, Dutch and Baltic support through consensus, and side-payments.

Whether or not Ireland chooses to completely veto any attempt to introduce a CCCTB is, of course, a political question, and likely to be determined by the partisan colour of elected government. But it is worth asking whether Irish citizens would support policies aimed at harmonising the tax base, even if Irish elites would not? Ireland is already in the spotlight for facilitating global tax avoidance (not least with the Apple case). Further, Ireland makes up less than 1% of the EU population (even if one adds the Dutch, Danes and Baltic states, combined they are only a small percentage of the EU whole). Hence, is it really in Irelands long term strategic interest to veto those EU policies aimed at strengthening the problem solving capacity of Europe, post-Brexit?

The future of the Eurozone is a Franco-German growth model, not an Anglo-American one. Ireland needs to decide which way to go.

By Aidan Regan

I'm an Assistant Professor at the School of Politics and International Relations, University College Dublin (UCD), and Director of the Dublin European Research Institute (DEI). My research is primarily focused on comparative and international political economy.

29 replies on “Brexit: Accelerating the Drive Toward Corporate Tax Harmonisation?”

There’ll be no decision about economic models. The Irish elites will keep the leprechaun economy ducking and diving at the intersection of the US-UK and the EU economic spaces. The nature of the pervasive and endemic rent-seeking may mutate a little, but it will continue without any effective restraint. And the Great Re-distribution will continue to keep the plebs in a reasonably manageable, if surly, docility.

Not sure I agree. Won’t happen overnight, but the end of Ireland’s soft-tax approach seems nigh and we’ll have no choice but to look again at the model. Time for us to grow up and compete on our merits, perhaps. But the debate and the planning need to begin now while we’re at least starting from a relatively good place and have time to make the investments required to develop our non-tax attractiveness before we lose our advantage. We’re talking ~10+ years out here so it will be interesting to see how the world looks then. UK: hurting from Brexit as the reality bites? US: lower corporate tax rate and an end to the repatriation barrier? EU: ever more closely integrated and still debating tax rate, as opposed to tax base?

There never really was a model. The decision to switch from Dev’s autarky was forced on the pols and policy-makers in the late ’50s. They knew that if they didn’t they might as well hand the keys back to the Brits. Since then all that has been added is ladles of opportunism and a Leprechaunish ability to exploit international trade and taxaton rules. That abiity to exploit the rules is being restricted. The ability to establish companies with stateless revenue not taxed anywhere has been removed and the Double Irish is being phased out. But there’s still plenty of scope for the rent-seeking leprechauns to duck and dive. Capitalism mutates continuously and its parasites are more resilient than rats and cockroaches.

@ Paul Hunt That’s a pessimistic view of things, but I couldn’t argue there’s some truth in it too. Like the poor, the capitalist parasites will always be with us. So we have to live with both and work to eliminate both safe in the knowledge the task is unending, but nonetheless worthwhile and necessary. It would also be fair to say that Ireland is not unique in ducking and diving. Indeed, as a small country among monsters like the US, UK, Germany and France, one of our chief advantages is the ability to duck and dive and to play on the fact that small marginal players can get away with all sorts of things that big players can’t. It’s a type of Ricardian comparative advantage! I suspect however that the ducking and diving will have to take a different, more sophisticated form in future, as the cruder, simpler forms are eliminated by the big boys. The Swiss, also surrounded by big players, but independent for so much longer than us, have brought ducking and diving to a really high level. We should perhaps learn from them, but add our own unique ‘leprechaun’ factor. Capitalist mutations, like those of the rats and cockroaches, are driven by fundamental and powerful forces for self-preservation. They’ll not be denied.

I agree that smaller countries should be able to adapt more nimbly to political and economic shifts in the big economies – and to benefit from this nimbleness.

There is a marked leftwing shift as the election campaign progresses in Britain. It is unfortunate that the tiny minds of Corbyn and McDonnell and their acolytes can’t extend beyond tax, spend and nationalise so that the good intentions they spout will never be reflected in reality, but there is a perceptible shift in voter sentiment. It is also reflected in the conflict in the Tory party with the attempt to re-establish municipal working class Toryism in place of Thatcherism. This is driven, for example, by the contempt with which the energy suppliers treat loyal customers. And BA’s treatment of its passengers over the last weekend will add fuel to the fire.

Merkel has squashed the Schulz effect both by shifting a tad to the left, Macron is seeking to colonise the centre and Gentolini is only keeping the seat warm for Renzi.

I’m sure the Irish duckers and divers will have no problem adapting to all of this.

No indeed. Chaos among our fellows creates opportunity for us (or at least the duckers and divers among us). I agree the shift in Europe, much of it towards the left or at least towards listening a little more to public opinion. That’s good in principle, but there’s also the issue that the public generally doesn’t know its arse from its elbow when it comes to macro-economics. Corbyn’s old style leftism may be seen as proof of this: it sounds like power to the people, but it’s at best naive and at worst downright deluded when it comes to figuring out where the funding for all this leftist largesse is coming from. The entire Brexit debacle is another fine example of public ignorance: the BES found that over 90% of ‘leave’ voters believed there would be no negative economic or trade consequences from their vote. Call that stupidity or ignorance, it doesn’t matter much now. I’m all for power to the people, but that really only when the people are well-informed, engaged and have the opportunity to partiicipate in debate and when politicians are reasonably honest and clear about what’s really going on (unlike both main UK parties’ manifestos). Not always easy to achieve. Impossible even?

Voting is not really the issue in relation to matters of taxation. If it were, the FTT proposal would have been adopted speedily under the procedure known as “enhanced cooperation” where a smaller group of countries, nominally at least, are in favour of steaming ahead. The train is stuck at the station cf.
The unanimity rule, where it applies, invariably implies that the subject matter is close to the limit of the willingness of member states to exercise their sovereign prerogatives in common. The departure of the UK will not change this. Indeed, one could argue that it will have precisely the opposite effect, the EU26 being less than trusting of what London might get up to in terms of making the UK more attractive for FDI.

“The future of the Eurozone is a Franco-German growth model”

We know what the German one is, but what exactly is the Franco growth model? They are talking about going Anglo-Saxon on hiring and firing, along with introducing English speaking courts, to compete for finance jobs.

I don’t think the Singapore model is available to the UK for practical and political reasons.

There is no Franco-German growth model. There may or may not be a Franco-German model, but its not a growth model, as they’ve had hardly any growth for 20-30 years. Call it the Franco-German stagnation model perhaps?

In France this is reflected in permanent high unemployment, a collapse in education (see PISA results), the virtual secession of large parts of its massive muslim-immigrant areas from the state, and its security services on a more or less permanent war footing. Once-magnifique Paris and other once-great French cities are looking more and more like Belfast in the 1970s, of which I have first-hand experience. And things are unlikely to improve given the recent stunning triumph for the socialist candidate in the Presidential election. I never would have dreamed 6 months ago that the socialists would retain power. It looks like the French have a death wish.

On the surface Germany is doing much better, It is financially sound and has very low unemployment. But, this is mainly to do with a massive fall in the number of young people entering the job market due to its demographic collapse (a complete contrast with Ireland, although liberals in Ireland are working hard to end this). Germany’s main problem is that it is fast running out of Germans. The number of Germans aged 20-34 is barely half what it was in the 1960s. If its current abysmally-low fertility rate remains as it is, Germany’s German population will fall by half by the end of the century. The implications for growth are obvious. To have any semblance of growth Germany will need to import huge numbers of immigrants from north Africa and the Middle-East this year and every year in perpetuity. Opinions differ as to the exact year in which it will become a majority-Muslim country, but that it will there is no doubt unless all current demographic trends are reversed.

Italy is in an even worse state than France and Germany, somehow managing to combine the worst elements of both. It has France’s economic stagnation, financial indiscipline and high unemployment and also Germany’s demographic collapse. Given its demographic collapse and proximity to north Africa and the Middle-East, ISIS recent boast ‘We will take Rome’ seems eminently realistic.

The role of liberals in Ireland is to investigate the factors that have ended population and economic growth in continental Europe and then campaign for them to be introduced here (high taxes, bloated welfare, hostility to religion (bar one), industrial abortion and massive immigration from beyond Europe).

The main hope is that America will move fast in the opposite direction to Europe in every sphere (economic, demographic, cultural) and in the process force Europe to reverse course. But, I wouldn’t be too confident that will happen.

John, AR has requested that we keep with the menu – so I’ll rain-check my response to this ” The implications for growth are obvious.” We are in the era where Rate-of-Growth is fluctuating gently about a zero value – and the implications of this are very nasty indeed.

The CCCTB boondoggle is just another attempt to finesse our national revenue service. If, as its proposers and their captured intellectuals assert, “It will be good for Europe” (and by extropolation,to individual citizens) then I would recommend that one apply a veracity discount rate of minus 100% to these statements.

The sheer size and weight of modern industrial and financial enterprises (its somewhat difficult to now separate those two attributes) is such that they render the aquiscence of the individual, and purposfully manipulated consumer, fully unecessary. The idea that any individual (other than a minority elite) will actually encounter any financial benefit from CCCTB will find root only in the imaginations of the weak-minded or those whose livelihoods depend upon their contrived and submissive behaviour.

Folks who receive wage-labour incomes which are just sufficient to sustain themselves may find an additional tax burden unaffordable. And one can assert, with a probability close to one, that our modern military/industrial complexes will not agree to pick up the slack for any public expenditure which they are unable to derive any benefit from. They already obtain very significant financial benefits from Government expenditures into some of our public services. They need the Government to sustain and maintain these specific services (via the domestic taxpayer). Since there is a fiscal limit to corporate taxes (limits payouts to the top managements) some overall arrangement has to be put in place to safeguard the levels of the nett contributions of corporations to Government taxes. And guess who will get shafted on this one? I know who won’t.

The shift left reflects the reaction by the general public to the fact that the income gap is widening and the people don’t like it.

The rise of the right has been fuelled by the rise of inequality and can only be slowed down by ensuring that income is better distributed and social mobility reinforced (e.g. via education).

On a wider level it may see the EU becoming more the champion of the consumer instead of the industrialist. A process that has been notably hampered by the UK in the past but soon no longer …

I would dearly love to see the EU’s institutions effectively champion the consumer, because the extent to which ordinary citizens as consumers are being ripped off is a major cause of public discontent. But the powerful coalition of corporate capitalists, of directors and managers of parastatal enterprises, of senior public officials and of trades unions (and the armies of functionaries and flunkies they all retain) will ensure it won’t happen.

The initial water charge protests (before they were hijacked by the left-wing headbangers) comprised large numbers of ordinary citizens taking to the streets to express their justified disgust and anger at the antics of the Irish version of this coalition. It was this which panicked the then government in November 2014 and led subsequently to the expenditure of so much political and administrative tme and effort to make the problem go away. Nothing terrifies this coalition of the powerful and the greedy more than ordinary citizens realising the extent to which they’re being ripped off and collectively and publicly expressing their disgust and anger.

And I would argue that it was not so much that the UK hampered any EU consumer-championing efforts; its simply that the EU adopted and adapted the British approach to the privatisation and regulation of utility and infrastructure services which has resulted in the systematic ripping off of citizens as consumers and service users. Ironically in the UK, despite attempts by the previous government to kick the issue in to the long grass, public anger at the systematic rip-off of electricity and gas consumers by the big energy suppliers panicked the current government in to proposing a price cap – which inevitably would be both futile and counter-productive. Not surprisingly the affected coalition of the powerful and the greedy is straining every sinew to water down this proposal. And the Labour party is simply too stupid to propose large-scale collective switching and efficient price discovery.

Is it too much to ask that comments are kept focused on Brexit and CCCTB; rather than turning into tangential rants against the political left?

Apparently so! (though I interpret the comments as mostly pro-left, albeit critical of leftist political leaders).

The key questions to which answers would now be helpful seem to be: a) the extent to which the CCCTB and related changes will affect decisions to invest in Ireland; and b) the nature of the direct and indirect effects on Irish tax revenues of the CCCTB and related changes.

Are you aware of any studies on these?

As for the UK, it is difficult to see how it can prosper outside the EU. The City is voting with its feet on passporting and equivalence by setting up new businesses in the EU. It’s doing this as quietly as possible lest it be publicly attacked in the Daily Mail or similar rags and turned into a political football (enemies of the people?). Privately most in the City are deeply concerned that the May government has little sympathy for the financial services community and would be happy to see it reduced in size (one of the effects of political populism). As you note, that could benefit Ireland, though in the absence of a shared EU bank bail-out arrangement, our tiny size means we have to abjure the more profitable risk-based activities (most seem likely to go to Frankfurt, as far as I can tell) and stick to lower-margin stuff.

It’s also worth pointing out that there are at least two major forces acting against the London-based financial services industry: the exit from the EU; and the rise of Asia. We are in the 30th anniversary year of big bang in the City. Prior to that, the City was a tiny shadow of its current self. It’s perfectly possible that, in 30 more years (a not unreasonable time frame for current policy to work out) the City may be a shadow of its 2017 self as business moves to the EU. If the 21st century is Asia’s, then global trading seems likely to move inexorably towards that area. It’s already happening in insurance, it’s only a matter of time before more financial services follow.

With regard to tax rates, the UK’s challenge will remain that it is outside the EU and one might reasonably expect the EU to make that point forcibly, by curtailing the rights of UK-based firms to trade in the EU. So a corporation tax (CT) cut to offset that trading disadvantage would be an act of desperation for the UK and one it can ill afford, given the state of its finances. Even where a low CT rate made it economically attractive for global firms to serve EU markets from the UK, I cannot see a situation where the EU, operating a CCCTB regime, would simply permit UK-based firms to generate revenues and profits in the EU and not pay any taxes where the profits were generated. That would clearly erode any advantage the UK got by lowering its CT rate.

The UK is caught between the devil and the deep blue sea. Its best bet is to try to expand its global/non-EU trade. That’s not easy. Ironically, it seems to be ambivalent about what is perhaps its most high-profile, truly global sector: financial services. And it seems likely to discover that the benefits it has reaped from being a very open economy (eg investment banking almost entirely in the hands of foreign companies, auto industry likewise) may mean that it suffers when it shuts itself off from its nearest and most valuable market, as the same mobile global enterprises move on.

Of course, that fate may await Ireland too, if our ‘comparative advantage’ (low tax rates; benign, pro-business approach; etc) also changes. Interesting times ahead.

Voting is not really the issue in matters of taxation.If it were, the FTT proposal would have been adopted speedily under the procedure known as “enhanced cooperation” where a smaller group of countries, nominally at least, are in favour of steaming ahead. The train is stuck at the station.
The unanimity rule, where it applies, invariably implies that the subject matter is close to the limit of the willingness of member states to exercise their sovereign prerogatives in common. The departure of the UK will not change this. Indeed, one could argue that it will have precisely the opposite effect, the EU26 being less than trusting of what London might get up to in terms of making the UK more attractive for FDI.

PS I posted the above with a link, now removed, which seems to have caused it to stall in moderation.

Corporate profits are at record highs, in part thanks to tax avoidance. Everything good comes to an end.

“The future of the Eurozone is a Franco-German growth model, not an Anglo-American one. Ireland needs to decide which way to go.”

If we are being asked to make that choice I think it is a legitimate – and genuine – question: What is the Franco-German growth model?

Also, and this may be one for Seamus Coffey or Michael Hennigan, are there any estimates of the tax Ireland would GAIN under CCCTB given that we would now get a ‘cut’ of the profits made by other EU countries selling in to Ireland e.g. BMW cars from Germany?


In order for a country to be included in the apportionment of a company’s profits the company must have a taxable presence (i.e. a permanent establishment) in that country. If BMW uses a local distributor to service the comparatively small Irish market then the proportion of BMW’s profits that will be taxable in Ireland will be nil. We will get to tax the full profits of the local distributor (provided it doesn’t have operations in other countries).

It is much less likely that the companies exporting in Ireland would not have a taxable presence in their large markets. Thus there is a much greater chance of the profits generated from manufacturing in Ireland being subject to the CCCTB formulary apportionment then there is from Ireland getting to tax a portion of the profits on products imported here.

@ Seamus Coffey

Thank you for that.

It has often been said that some UK retailers (e.g. a well-known supermarket) earn large profits in Ireland but refuse to disclose separately in their accounts what their profit margins are in Ireland. I presume CCCTB would compel companies to disclose this information to allow the profits be apportioned to Ireland? I appreciate the UK won’t be part of CCCTB but I imagine there will be creative accountants all over Europe looking at ways to get around CCCTB.

Echoing what JTO wrote earlier, I wonder if the term ‘Franco-German growth model’ is an oxymoron?

It is. I have a post, again stuck in system moderation, with a link to a recent study by the Institut Delors (remember him!) that cuts to the chase i.e. what is actually the main topic of discussion as far as the EU is concerned in terms of economic issues; the resolution of the problem of economic disparities between the two key components of the EU, France and Germany.

” …. the resolution of the problem of economic disparities between the two key components of the EU, France and Germany.”

They have already done this – and there have been several updates. Its called MAD – Mutually Assured Dependence. Its not the sort of thing that either of the respective ruling elites would want to admit to, but its a fact and it will be updated as and when necessary, to acount for changing political and economic circumstances. There was/is a problem with both the UK and Italy. But its best not to draw to much attention to this. Italy is economically moribund. The UK has decided to fly the coop. Sighs of relief in Paris and Berlin.

As others have pointed out, the terms Franco-German or Anglo-American growth model are largely meaningless. The real issue confronting the EU is the uneven growth models of the different countries but especially those of the Euro Area. It is a chicken and egg situation; which comes first, deeper integration or structural reform? The answer must lie somewhere in the middle cf.

Not sure what that epistle is all about – looks like a lot of Harry G Frankfurt style waffle. Comparing the US v the EZ is virtually meaningless. The US is a long-standing, monolingual, sovereign, fully developed industrialized intergrated currency union, the EZ is not. And it will never achieve such a status – the political sharks are too big and the economic boat is too small.

It appears that up to 2008 or thereabouts the Rate-of-Growth in the EZ was 2 (rough unitary estimate), but it is now just above 1: a 45% decline in rate? That’s very nasty indeed. Capitalist economies cannot long exist in their historical political form with ‘sustainable growth rates’ – their economic expansion has to be continually increasing (non-sustainable) on an annual compounding basis. Takes a while for the effect of a sub non-sustainable Rate-of-Growth to become apparent. But is has.

A First Aid kit will be useful? Depends on the nature of the trauma. I’d recommend an Air Ambulance on-call 24/7! Is the ECB considering a Major Trauma Suite? Availability conditional? Greece is still on a corridor trolly. Ireland is using a self-propelled mobility aid. And those folk want reforms? What in the name of God are they thinking?

The dreaded “formulary apportionment”: there be big demons with big fingers around there!

Global implies that we incorporate as many systems as possible … so as to garner the revenue to spruce up the poor condition of much of the local place.

The idea of the UK becoming the Singapore of anywhere is risible. Singapore works due to its culture which is somewhat different to that of the UK.

I presume that the UK will still be subject to BEPS (Base Erosion Profit Sharing)

Ireland has been benefiting from companies exploiting transfer pricing which is also closing off, the common tax base issue may be increasingly academic if the profits are no longer coming to Ireland.

It my well be. But the EU26, given their internal differences, will not want to take the risk.

As to Ireland, the policy establishment in general has to get beyond the knee-jerk reactions of (i) our sacrosanct tax regime being under attack (ii) seeking assistance – from somewhere – in any difficulties that may arise.

Derek Scally summed up the new international situation in his recent excellent report on Merkel’s much remarked “beer tent” comments as follows.

“On Sunday in Munich, a sadder-but-wiser chancellor didn’t collapse Germany’s postwar transatlantic co-operation, merely drew the conclusions of the new status quo.

Her door remains open to the “deal-making” US president, but Merkel is calling time on those who take a similarly transactional approach to the European Union: a timely warning to Ireland’s next taoiseach.”

For a country awash with slurry, there will be no sympathy, for example, and no excuses will be accepted, with regard to meeting climate change goals.

Brexit, put simply, is a test of Ireland’s national maturity.

“Brexit, put simply, is a test of Ireland’s national maturity.”

Hardly, but some other time. An EZ Tax Harmonization scheme? In a fiscally porous currency area? With vast differences in the natures and extents of economic activities of the members? With testy soverigns whose taxpaying voters have decided that they can be simultaneously loyal to their country and disloyal to their governments? As for the European equivalents: its the Agincourt Salute with both hands.

This notion of Tax harmonization whilst its a terrific policy – establishing it in practice is a complete political non-starter. But our politicians will just persist with it – for the optics, and in the sure and certain belief that it will not come to pass. Some plausible formula will be devised to assuage the taxpayer-voter – who, as of this time, has no workable version of ‘Countervailing Power’* to force or coerce over-enthusiastic politicians, civil servants, trades union leaders and assorted special interest groups to – in the shamefully neglected words of our Constitution – “… de réir mar a bheas riachtanach, teorainn a chur le hoibriú na gceart réamhráite d’fhonn an t-obriú sin agus leas an phobail a thabhairt dá chéile.” The emphasis being firmly upon those final six words.

Political Realism demands and commands that political leaders seeking (and holding) elected office shall treat their own sovereigns as being of the first among the unequals. The political and economic barriers to further European intergrations are as fearsome and impenetrable as the Iron Curtain in its heyday. I am of the belief that this ‘alternative fact’ is firmly understood in the usual places. Only the cognitivally challenged and those whose livelihoods depend upon it, would believe otherwise.

* cf: J K Galbraith (1956) ‘American Capitalism – the Concept of Countervailing Power’.

The EZ is a neoliberal project and neoliberalism stipulates that fiscal activity is ineffective. Tax harmonisation would qualify as fiscal.
Ireland lost around €100 bn following the banking meltdown because of another neoliberal canard, that the economy recovers quickly from shocks. The EZ was designed on this principle which is why it doesn’t have bank recap or a lender of last resort. Taxpayers therefore had to take one for the team. Ireland’s debt to GDP ratio is an everyday reminder of this fact.
The value to Ireland of the 15% tax is probably less than €100 bn plus the cost of the next crash. Tax harmonisation plus EZ structural reform away from neoliberalism (including bank recap and LOLR )would make a lot of sense to policymakers who get the big picture. AIB will just crash regardless but the allocation of losses is what counts.

Comments are closed.