It is not often that nations can gain global admiration for what they achieve - as Britain and the US did in the second World War, but the stories of smaller countries may not spring so readily to mind - Norway and Denmark’s stance against Nazi aggression in the war, or those who lost - Estonia against Stalin and Hitler.
In peacetime, the examples are harder to find, but Ireland’s economic policies have garnered admiration in many quarters. Many small and emerging countries have taken note of Ireland’s development policies over the years, particularly in the wake of the financial crisis of 2007-8.
Now, an historical moment has dawned in that story, and forces have gathered, very quickly, thanks to the urgent injection of pace by the Biden administration, led by the Treasury Secretary, and former Fed Chair, the first person in history to occupy both positions, the Nobel-cited economist Janet Yellen.
A formidable coalition has gathered under the aegis of the OECD added to by Russia and China, the latter no doubt relieved by the shift in the global tax agenda from tariffs to corporation tax.
They and an army of journalists and politicians stand gathered to unleash a perfect storm of abuse against Ireland’s stance in defence of trying to minimise tax at the point of production for producers, be they individuals or corporations, (as all companies actually represent people and pensioners also).
The fact remains that Ireland has a truly just case, and Paschal Donohoe as an economist of considerable talent has been well able to match the charm offensive directed towards him to date.
There is an economics debate to be had between now and October, when the next stage of the BEPS process happens. Donohoe has sound economic arguments to deploy, most importantly the idea that the latest BEPS proposals from the OECD itself threaten damaging unintended consequences for the very countries and taxpayers who the global corporation tax reforms are intended to help. There’s an explanation of this in our cover feature starting on page 8.
Ireland and Donohue have already made major pragmatic concessions by accepting “Pillar 1” in attributing a portion of tax to ‘market jurisdictions’ (on very big corporation revenues). The significance of this, to date, because of its complexity, is not, yet, widely understood in political quarters who fear Ireland being temporarily in danger of attaining pariah status. By advancing on the grounds of principle, not expediency, the Irish position can be fought on this firm moral high ground. It is in the interest of each and very member state in the 139 country BEPS process also that they do so.