The (unelected) EU Commission has decided that Ireland has not been charging Apple enough tax. Essentially it is arguing that Ireland’s tax arrangements with Apple constitute a form of state subsidy of a type forbidden by EU law. Brussels is now insisting that Ireland should recover up to EUR 13bn (Roughly $14.5bn) in ‘unpaid’ taxes from Apple.
Here’s (some of) what Apple’s Tim Cook had to say:
“We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.”
The US government is not too pleased either.
Over on the home page, Kevin Williamson takes aim. As you’d expect, the whole piece is well worth reading, but these two sentences are key:
What Brussels cares about right now is that Ireland has lower taxes than many other EU countries, which creates what the masters at the EU regard as unfair and undesirable “tax competition.” Competition apparently is great for markets (hurrah, choice!) but not for governments (hurrah, monopoly?), at least from the EU point of view.
The EU’s competition commissioner, a strikingly self-important Dane by the name of Vestager, is, it seems, opposed to competition. ‘Orwellian’ is the word, I believe.
But this is about more than just tax. As, I’ve noted on a number of occasions, the EU has been trying to hit back at the success of the American technology sector for quite some time. In 2015, for example, the EU’s so-called “digital commissioner” (then busy attacking Google) publicly complained that the EU’s “online businesses are today dependent on a few non-EU players,” warning that “this must not be the case again in the future.”
In a powerful article the Daily Telegraph today (again, read the whole thing, especially the passage describing the powers of the EU’s Competition Directorate), Ambrose Evans-Pritchard makes a similar point:
[There] is a strong suspicion that powerful forces in the EU are trying to use state aid probes to break the global dominance of America’s technology giants, vainly hoping to nurture its own ‘Silicon Valley’ behind a digital wall. Amazon, Facebook, Google, as well as Apple, are all under fire, and Microsoft has fought an epic battle.
The view in Washington is that Mrs Vestager’s probe of the Russian gas giant Gazprom is being conducted with kid gloves, and that she is strangely accommodating over the Nord Stream pipeline so favoured by Germany. It is almost as if some in Brussels view America as the real enemy.
That goes too far. The EU sees both Russia and the US as, well, rivals. But, of the two, it only envies the US.
And then Evans-Pritchard makes a very dangerous connection:
The US has in the past played down the episodic outbursts of anti-Americanism, but patience is wearing thin and the strategic calculus is shifting. Donald Trump has already warned that he is willing to “walk away” from NATO altogether. Others question ever more loudly exactly why the US should continue to guarantee the EU’s eastern border against Vladimir Putin’s Russia if Brussels is behaving in such an unfriendly fashion – and without the American security blanket a disarmed Europe is almost completely defenceless…
As an example, Vestager’s home country of Denmark spends roughly 1.2 percent of GDP on defense, far below the NATO target of two percent. Food for thought, that.
Of course, quite a few of the Irish, most of whom probably thought they had the right to set their own taxes, are none too happy about Brussels’ move, and that’s despite the prospect of some extra money coming their way. Evans-Pritchard quotes one Irish MP describing the Commission’s move as “a highly politically-motivated targeting of a small member state”.
In the EU, some states are more equal than others, it seems. As I said, Orwellian.
And there’s one other thing. In 2008 Irish voters rejected the EU’s notorious Lisbon Treaty in a referendum. They were persuaded to change their mind in a second referendum held the following year. In doing so, they were influenced by the country’s desperate economic condition (the financial and euro zone crises had erupted in the meantime) and by guarantees that the treaty would (to quote the BBC) “not affect key areas of Irish sovereignty, such as taxation…”
Oh.