So the European Commission has today released its much-delayed iTax. This time, it’s not an Apple innovation but a ruling ordering Ireland to claw back €13bn in back tax from Apple – a record penalty and one that the company and Ireland have both vowed to appeal.
The Commission announced its decision in a typically terse ruling, in which they chuck rotten fruit at Ireland’s low corporate-tax environment. But whilst every one is talking about tax, this fracas between the EC and Ireland over Apple’s bill—what we here locally might call a ballyhoo—actually has less to do with one of the two inevitabilities of life, and much to do with the Commission’s Competition Commissioner, Margrethe Vestager. Vestager could barely conceal her glee at a press conference today when she revealed the mammoth bill. She’s been across the airwaves ever since, talking about her role in bringing Apple to book. So who is she and what has she got against Apple?
In reality, Vestager – Denmark’s former deputy PM – is under political pressure from several national capitals to deliver these kind of results. But she’s a willing taskmaster. The daughter of two Lutheran rectors, Vestager sees herself as Denmark’s ‘David’ going after corporate ‘Goliaths’’ (or at least that’s how her biographer puts it). Apple, then, is just another ‘Goliath’ for Vestager as she aims to rescue Europe’s place in its people’s hearts by taking down the giants. She’s certainly got a track record, having taken on EDF, Fiat and Starbucks. But these were small friendlies leading up to today’s test.
Vestager knew today’s ruling was upping the stakes in her campaign to break big business. Consequently, she took no chances in ensuring the maximum amount of publicity: using an emergency procedure to avoid the usual fortnight notice period for such a ruling to avoid any leaks. It worked: the news has been across the headlines around the world all day. It’s also resulted in a furious backlash from the Irish government. But there’ll be some in Ireland who don’t react in fury and will now pile pressure on the country’s government to put itself in line with the ruling. €13bn, by anyone’s measure is a colossal sum of money; in Ireland, it would fund the country’s entire healthcare budget for a year. And with the country’s public debt tipping the low side of 100 per cent of GDP, it puts Dublin in an awkward position to say it doesn’t want any of the cash.
This clearly isn’t an accident and it ramps up pressure on Ireland to bend its tax rates towards the winds coming from France, rather than from the tax havens of the world. Yet whilst Apple’s €13bn would solve a good few problems in Ireland, this isn’t a ruling to cheer. At least it isn’t if you are a free-market liberal — or even one who harbours vague hopes that the EU might, one day, reform into a Northern European-model trade engine. Equally, if you think democratic states should be able to set their own tax levels to drum up growth and investment, it’s clear that the European Commission’s decision today is not good news.
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