Monthly Archives: January 2017

Why does the IDA want lower income taxes?

Earlier this year a newspaper report indicated that the IDA was lobbying against higher income taxes claiming that high income tax was making it difficult to attract foreign investment and was hitting job creation.

In August last year we submitted an FOI request looking for the analysis to back up these claims and all records of any lobbying in respect of income tax and social security rates in Ireland.

The IDA said that it continually analyses personal taxation and social security and how it influences FDI in Ireland and pointed to various methods including a 2015 survey by KPMG, a report from the Tax Institute and engagements with stakeholders, clients and staff. Specifically IDA undertook research in 2016 to identify reasons why some companies who considered Ireland chose to go elsewhere. According to the IDA, personal tax was among the reasons why they did not choose Ireland.

However, none of the underlying records were identified or released.

All IDA provided were redacted copies of 2017 pre-budget submissions calling on the government to reduce the top rate of income tax from 52% to below 50% and to set out a road map of income tax reductions up to 2020.

Tax rates are a big public interest issue. Taxes are used to fund public services (including the IDA it must be noted). With lower tax rates there must be an objective analysis of the trade-offs that are being made. While nobody necessarily wants to pay more tax – a public body such as the IDA would be expected to be sensitive to the bigger issues at play when it calls for tax cuts. In particular there must be a clear public benefit based on objective analysis so that the IDA position is substantially more than mere lobbying on behalf of big business.

We believe that the IDA must disclose its tax analysis and identify the interests that are driving it to intervene in the public debate over tax rates. To that end we are not satisfied that so much information has been withheld and have now filed an application with the Information Commissioner to review the IDA’s decision to keep the bulk of its information supporting its position on lower taxes from public scrutiny.

The Information Commissioner has invited us to make a submission in early January and we expect him to make a decision shortly after that.

We will keep you posted.

Here is IDA’s response:

Information Commissioner orders UCC to answer questions about Apple relationship

Apple is one of the largest employers in Ireland and certainly the largest employer in Cork.

The US company is at the centre of one of the most significant European State aid cases of all time. This year the European Commission ruled that Ireland’s tax arrangements with Apple were illegal. The result is that Ireland must recover over €13 billion from the American electronics giant in illegally foregone taxes. While the case is now set to be appealed, the finding is considered to be an attack on Ireland’s tax system which is designed to attract foreign direct investment.

Given the importance of the Apple State aid case we were interested in finding out what supports, either financial or otherwise Apple was providing to UCC. Such supports are rarely controversial, large companies often sponsor research and cooperate with universities with a view to attracting graduates. Sometimes a large corporation wants to give something back and will contribute philanthropic money to educational establishments.

Universities and academics are considered to be experts in many areas of technology, economics, and policy, and their views are often reported as independent and objective and reported as such without question.

To maintain that reputation transparency in respect of private funding is important so that the public can know what interests are at play.

While there is absolutely no indication whatsoever that Apple exerts influence on UCC we felt that it was important that any financial or other support that Apple gives to UCC is known given the public controversy over its operations in Ireland.

In September we filed an FOI request with the university looking for full details of the support it received from Apple since 2011. UCC chose not to respond to our request including our request for an internal review. In the end it only responded once an appeal was lodged with the Information Commissioner.

In its response, UCC made contradictory claims. It said its accounting system does not record the identity of persons making payments to it and without offering any assistance it said that the volume of records would be too large for it to handle.

The Information Commissioner has now found that UCC’s justification was inadequate and ordered it to answer the request.