In August of 2016, the European Commission ordered Apple to pay over €13 billion in unpaid taxes to Ireland. However, the Irish Government appealed this decision, much to the confusion of many online commentators.
I mean, who in their right mind refuses €13 billion? Surely, our government should grab that money with both hands and invest it in housing, healthcare or infrastructure. Right?
Sadly, the vast majority of online media outlets didn’t even attempt to clear up the confusion. Most of them simply used the story to stir up outrage for more clicks on their social media profiles. Practically none of them took the time to explain why the Irish Government might refuse such a large cash injection.
Why doesn’t the Irish government take Apple’s money?
The simple distilled-down answer is this:
That €13 billion is nothing in comparison to the amount of money that multinationals such as Apple contribute to the Irish economy on a yearly basis.
The Irish Government doesn’t want to seem like it is turning its back on the same companies that have been injecting large sums of money into the country. It also doesn’t want to admit blame. Accepting that €13 billion would be akin to saying “Yes, we gave Apple illegal tax benefits.” This would also enforce the view that Ireland is a tax haven.
Essentially: Putting billions and billions of Euro in tax receipts at risk for the sake of a quick cash top-up would be incredibly short-sighted.
Multinationals inject a lot of money into the Irish economy.
Let’s take a look at the facts:
- Multinationals in Ireland employ over 220,000 people directly. That’s nearly a quarter of the entire Irish workforce.
- Those 220,000 people pay a lot of income tax every year. The average wage of a person working for a multinational company is close to €85K per year. That’s €45K higher than the average yearly salary in Ireland.
- These multinationals also have an indirect impact on the Irish economy, as they purchase goods and services from Irish companies. They hire agencies and they pay construction companies to build their new office blocks and factories. Irish transport and shipping companies help to export their goods. In 2015, it was reported that multinational companies spend €3 billion per year on fixed capital investment in Ireland.
- In 2019, it was estimated that U.S. companies alone contribute over €20 billion to the Irish economy on a yearly basis.
- Between 2008-2012, multinational companies paid about €15 billion in corporation tax. That was roughly 75% of all corporation tax paid to the Irish Exchequer during that period. In 2017, Ireland received €8.2 billion in corporation tax. This means that multinationals companies probably paid around €6 billion in corporation tax in 2017.
That is an awful lot of money to risk for the sake of €13 billion.
Put it this way: If you had a magical money tree that grew €300 every year, would you really sell it off for €130?