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Lorna Bogue: Why swim against the G7 tide? Ireland needs vision for a post-12.5% world

Lorna Bogue says the writing is on the wall for the ‘charade’ that is Ireland as a tax haven.

Image: Xinhua News Agency/PA Images

LAST WEEKEND G7 leaders gathered in Cornwall in the UK following a historic agreement to endorse a global minimum corporation tax rate of 15%.

This met a cool reception from Government buildings with finance Minister Paschal Donohoe pivoting immediately to the OECD, hopeful perhaps a larger sample of countries would stymie this particular move.

This hope is closer to wishful thinking as from the perspective of the Global South 15% hardly scratches the surface of the social and environmental costs visited upon them by firms and governments in the Global North through unsustainable production and consumption.

For Ireland, 15% might seem a marginal increase against the current 12.5% headline rate. This belies a problematic truth; the economy of Ireland is little more than a carefully-studied contrivance of “innovative” industrial policy.

In reality, our only innovation is taxing billions from the sales in rich countries of commodities produced in poorer countries at a close-to-zero rate. This illusion is one the Irish State has invested heavily in maintaining for three decades, and one government wishes to remain unaltered.

Already the Irish public is being given dire warnings of losses to Ireland’s corporate tax rates of around 20%. In absolute terms, however, this significant percentage loss comes to only €2.2 billion.

A signifier of the scale of global tax leakage Ireland is facilitating and a smoking gun that points to how the Irish state has systematically missed opportunities for sustainable and real economic growth.

FDI obsession in a climate crisis

The fact is Ireland’s economy, geography and society have been repeatedly upended in pyrrhic transformations aimed at attracting Foreign Direct Investment (FDI). This industrial policy and what it actually produces in real terms continues to go uninterrogated.

The illusory permanence of this tax haven configuration is so deeply ingrained that Irish political parties left, right and centre have routinely committed themselves to maintaining the current headline rate. Even the spectre haunting the 2020 general election, namely a government led by Mary Lou McDonald and supported by parties of the centre-left and left, was committed to Sinn Féin’s manifesto promise not to budge from 12.5%.

The opportunity presented by the G7 decision for Ireland is far bigger than a technocratic strengthening of the tax base to become a marginally less unsustainable and unequal society.

The real threat to the economy is not the “loss” of phantom GDP from the flight of tax-evading corporates in the Docklands. Far more risky is the State’s obstinate insistence on maintaining a failing status quo in a world in flux.

When Ireland joined the EEC, and later the Eurozone, governments at the time sought, in their own ways, to position Ireland favourably in emerging economic paradigms. That instinct is strangely reversed now, with the government desperately parroting the British government who are bargaining for lower rates and exemptions to sustain aspects of the current configuration against the direction of travel of the rest of the world, including the USA.

Ireland’s industrial policy now faces a decision similar in scale to that of entering the EEC. If we are to actually be participants in a post-carbon industrial revolution we must become integrated among the producers of the world, not the extractors.

This production must be ecologically sustainable to survive economically. While New Zealand—an island country reliant on agricultural export—is investing heavily in developing capacities for decarbonised and sustainable food production in anticipation of the demands of a global population of ten billion, Glanbia, Kerry Group and the Irish meat industry carry on regardless. This will lead farmers to the edge once more, with a callous disregard for the precarious workers it exploits in so doing.

Admit defeat, refocus, rebuild

Smoothing the edges of an economic model rapidly reaching obsolescence is twiddling our thumbs while the planet burns. Feigned earnestness about complications caused by minor tax deficits is a cheap substitute for planning for the emerging post-carbon global economy.

It has never been so cost-effective for countries to invest in their own futures through Green New Deals. Reorienting the economy towards people’s wellbeing is not just a moral argument those of us on the left make. The population’s wellbeing is a necessary condition for the type of innovative economy we need. Innovation requires people to have the breathing space and capacity to take risks, to invent and to create.

There are so many areas where the Irish State can intervene to future-proof the economy if we make the right decisions now. New forms of renewable energy that can be scaled to the state, agroecological food production, recovering and reinventing building materials and innovation in recycling technique.

These are the labour intensive technological advancements that the world needs and only secure, motivated and democratically organised workforces may produce. We as a state aren’t at the races because our nonproductive economy as currently formed will never get us there without investing in the social interest.

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If the government parties cannot read the writing on the wall for the tax haven charade, those interested in a just transition must cooperate to develop a programme that pivots the country out of neoliberalism.

Left to its own devices, Sinn Féin will assimilate into the well-worn grooves of normative governance and miss the opportunities presented by this sea-change to reorient the economy towards equity and sustainability.

If progressive and radical organisations want to alter the paradigm, we urgently need to translate our shared demands into a viable programme of transformation to a post-tax haven economy that puts society’s and the planet’s welfare ahead of capital’s, and ensure that it is carried out whenever this stultifying government finally succumbs to the economic paradoxes it has created for itself.

Lorna Bogue is an An Rabharta Glas Councillor in Cork City South East. She holds a masters in economic analysis.

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