Sunday, 26 May 2013


In  hearings in the United States Senate recently, on the tax paid in the United States by the Apple Corporation, Ireland was described by one Senator as being a “tax haven”. 

This is wrong.

The Irish Minister for Finance , Michael Noonan, has said that The OECD and the international community do not regard Ireland as a tax haven. 
The OECD, a body of which both Ireland and the United states are members, is currently working to curb tax avoidance, including by international corporations. 

The OECD identifies four key indicators of a tax haven:
  • the first is having no taxes or only nominal taxes;
  • the second is a lack of transparency;
  • the third indicator is an unwillingness to exchange information with tax administrations of OECD member countries; and
  • the fourth indicator is absence of a substantial activity requirement. 

None of these criteria apply to Ireland, . 
The United States is a member of the OECD. Indeed it founded it.  This OECD definition is the authoritative definition and, unless or until it is altered by collective agreement it should be respected by United States Senators.

Ireland has a comprehensive taxation system covering income, capital and indirect taxes and has Double Taxation Relief Agreements with 68 other countries.

The January 2011 Global Forum Peer Review Report on Ireland’s legal and regulatory framework for transparency and exchange of information found that Ireland has an effective system for the exchange of information in tax matters and is fully compliant with OECD standards.

The Irish 12.5% corporate tax rate is a general rate for trading income that requires the trade to have real substance and activity. The Irish corporate tax code does not distinguish between small and large enterprises, or between enterprises that service the local economy, and those that have a multinational focus.


Part of the problem, which has given rise to the controversy in the US Senate, is the unusual US policy assumption that tax must be paid by a United States corporation, even when the economic activity that generated those profits took place outside the United States.

 What would happen if every country applied such a policy?

 It is extraterritorial legislation of an unacceptable kind.

The fact that the United States levies a 35% tax rate, if profits generated outside the United States, are eventually brought back into the United States, creates an artificial incentive  to companies to keep their overseas profits overseas.

That is a problem of the United States tax code, not the Irish tax code.

Another problem is the complexity of the US tax code. The US ranks 69th in the world ranking in the matter of ease of paying taxes. Ireland is near the top of that ranking.

Americans spent $168 billion last year complying with the 74000 page, 4 million word, US tax code. Apparently the US tax code is many times longer than the French or German tax code.

Apple’s effective tax rates are small because the trade charges on its intellectual property is large, and that reduces its liability. Royalties on intellectual property are a legitimate business expense. 


There is a need to improve the capacity of states to collect tax on corporate income. 

In a world where capital is mobile, and people are not, there are opportunities for tax avoidance that reduces revenue.

That ,in turn, reduces the ability of states to maintain the social peace and freedom, from which corporations themselves benefit so much. International corporations should cooperate with this work, in their own interests.

I hope the OECD work on all this yields fruit.

Saturday, 18 May 2013


I was in the United States for the past week for the Irish International Financial Services Centre, meeting businesses with substantial investments and employment in the international financial sector all over Ireland , in Dublin , Cork,  Arklow, Claremorris , Letterkenny and  Carlow.

I visited  Chicago, Minneapolis and New York.
The United States economy is recovering and the budget deficit is coming down.

The US budget deficit is around 6.4% of GDP, as against average Eurozone budget deficits of 2.7%.The Irish deficit about 7% of GDP.
The US economy is expected to grow by 1.7% this year, whereas the eurozone economy will contract by 0.8%. Ireland, unlike the rest of the eurozone will grow by 0.5%.

On the other hand the United States has a balance of payments deficit of  3.3%, against a eurozone surplus of 1.3%.  Ireland’s balance of payments surplus is 3.5% of GDP, although this is mitigated by  greater than average repatriation of profits.
There are limits to the extent to which a country can grow by importing more than it is exporting. But the United States has accessed new energy resources, which will help it a lot in the medium term. Europe is not in that position. It is, and will remain, a large net importer of energy.
Worries were expressed to me that the proposed Financial Transaction tax in some EU countries, and the generally more stringent pay limits in the financial sector, will divert some financial employment from Europe. Hyper cautious regulation may have the same effect. 
There was high praise for the quality of the workforce available in Ireland, especially as regards their flexibility and maths skills.

I was told that the nature of work will change radically in coming years. Because of technological development, 80% of new job growth in the US will come in firms now employing less than 5 people. This plays to Ireland’s strengths, in that it is  easier to set up a new business in Ireland than it is in most of the rest of the world.

Sunday, 12 May 2013


Two weeks running the “Sunday Independent” has devoted many pages to personal criticism of me.

These criticisms were supposedly based,

first on the content of an article I wrote in the “Irish Independent” about the unwisdom of a threat of suicide being made a legal ground to allow abortion, and 
second on a few tiny extracts from a  long ex tempore speech I gave at the European Insurance Forum on the need for Europe and Ireland to have a growth model that was sustainable, politically, financially and environmentally.

In the speech, pointed out that our economy will only grow sustainably, if it is seen to be paying its way.  We still have a problem in Ireland in that we are, even now, borrowing for some of our day to day Government spending, not just for debt service.   I said that increasing borrowing in these circumstances was leaving today’s burdens on the shoulders of our children, and I did not believe that was right. 
We may look to others to stimulate their economies, but that is not as easy for them as we might like to think.  I said that it had been estimated that the average baby born in Germany has an implicit debt to pay, of nearly 200,000 euros, for entitlements and debts, promised or incurred, by its elders in Germany itself. Similar conditions apply in other EU countries to whom we might look for stimulus.

I also drew attention to EU research a few years ago that showed that by 2050, because of ageing and low birth rates, the debt/GDP ratio of almost all countries in Europe would grow to between 400% and 500%, if policies then followed   remained unchanged. That’s about 6 times what it is today.

Changes needed to remedy these problems would be called austerity by many, but they are inevitable, I argued, because money is only lent where lenders are confident they will be repaid. And sentiment on that can, unfortunately, change overnight.
Similarly, western consumption patterns may need to be adjusted to become environmentally sustainable. Some might call that austerity too.

If western consumption patterns were to be replicated across the world by the 3 billion additional people who have, since 1990, entered into competition with us for scarce energy, scarce water and scarce food resources, humanity would face possible catastrophe. 
The lifestyle of the average German consumes 40 times as much water as that of the average Egyptian. CO2 emissions per head are much higher in Europe.  The amount of acres needed to produce enough food for European consumption patterns is much greater too.

But since 1990, the arable area per person in the world has halved, and yield improvements have not kept pace. Some forms of fertilizer, like phosphate, are in finite supply.
I then suggested a sustainable  growth model for Ireland and Europe. I put forward ideas, including more innovation in the public sector, educational changes, and targeting our R and D at things that can make our lives more sustainable. 

In my earlier intervention on abortion, which also displeased the “Sunday Independent”, I pointed to the inherent legal and ethical difficulty of using a suicide threat as a basis for legitimating anything, and to the fact that an unborn child in Ireland has inherent constitutional rights, the first of which is the right to live.
The “Sunday Independent” did not engage with any of these concrete arguments, which I put forward on the basis of evidence in each case.

Instead its whole thesis was that, because of who I am, my character, where I was educated, and my income, I simply should not be allowed to express a view at all. Strange, from an advocate of free speech!

The paper even accused me of being a demagogue.  Attacking individuals, rather than debating real choices, is what demagogues do.

That is not what I did, or do, and I leave to its own readers to decide if it is the “Sunday Independent“ itself that is acting  as a demagogue in this case. 


Sixty eight years ago last week, the War ended in Europe.

In the Second World War, the Soviet Union suffered 65% of all Allied military deaths, China 23%, Yugoslavia 3%,  and the US and Britain just 2% each.  The vast majority of German casualties were suffered on the Eastern Front against the Russians, and much fewer in France, Italy, the Balkans and North Africa.

I derive these startling statistics from “All Hell Let Loose, the World at War 1939 to 1945” by Max Hastings, which I finished reading recently.

The book’s focus is on the human impact of the war, using diaries members of the public kept, letters home from the front (some of them never posted but found on the bodies of dead soldiers), and other previously unpublished material. It also draws on the excellent autobiographical novel of Irene Nemirovsky, “Suite Francaise”, which deals with the impact of the war in a French village occupied by the Germans.

But Hastings is a military historian, and he weaves all this material together with a very good narrative of the politics and the warfare. He is unsparing in his judgements of the relative fighting qualities of the respective armies, and of their Generals.

Few British Generals, except Slim in Burma, get a good mark. McArthur’s attempt to retake the Phillipines is seen as an ego trip and unnecessary to the goal of defeating the Japanese.
The German forces were the best, right to the end.
Hastings  interprets Hitler’s, ultimately disastrous, decision to invade the Soviet Union as motivated by his belief that the Russians were rearming fast, and  by a desire to knock them out before they became strong enough to do the same to him.

The Russian’s achievement, after the Germans attacked, to quickly move their industrial capacity to Siberia, out of Hitler’s reach, was what eventually led to the fall of the Nazis.  And Stalin eventually learned to leave military decisions to his generals, whereas Hitler never did
This is a book of 675 pages, not to be summarized here, but it is well worth reading