Irish Cabinet Debates Whether To Accept Apple Tax Windfall
RENEE MONTAGNE, HOST:
Here's a question that would seem a no-brainer. If you were offered $14.5 billion, wouldn't you take it? If you're the Irish government and that money is supposed to come from Apple, the answer turns out to be far from simple. In fact, today Ireland's cabinet is debating whether to take the money or appeal a decision by the EU that ordered Ireland to collect it. To discuss this remarkable dilemma, we turn to NPR's Frank Langfitt who's following this story from London.
FRANK LANGFITT, BYLINE: Good morning, Renee.
MONTAGNE: Remind us why Apple has been ordered to pay Ireland a fortune.
LANGFITT: Well, the EU said Apple was basically getting away with paying a ridiculously little amount of taxes through Irish subsidiaries. The European Commission, for example, said, in 2014, Apple paid less than 1 percent of tax on $16 billion in profits. Apple CEO Tim Cook called this all political crap. But the EU doesn't think so and really does care about this. The EU is basically saying that this gives Ireland an unfair advantage over other EU countries competing for corporate investment and gives Apple an unfair advantage over other companies.
MONTAGNE: Ireland, though, is a small country with a small economy - $14.5 billion is real money. Why is this even a question in Ireland?
LANGFITT: Well, you're right. It is a lot of money. To give an example, this is more than 5 percent of the GDP of Ireland. It equals the nation's annual health care budget. Some in Ireland's cabinet, of course, say there's an obligation to take the money. The problem is this is a part of Ireland's business model, low taxes. Ireland's corporate tax rate is 12.5 percent. That's almost a third lower than France's. And this is the way Ireland has been able to create a hub for tech companies. Google, Apple, Microsoft, Facebook - all providing well-paying jobs there.
Now, Michael Noonan - he's Ireland's finance minister - he says the government has to appeal the order to preserve its business model and also keep up its reputation with multinationals. This is the way he explained it to the Irish broadcaster RTE this week.
(SOUNDBITE OF RTE BROADCAST)
MINISTER OF FINANCE MICHAEL NOONAN: And it's my absolute judgment, after examining all the factors, that this is the best course of action. To do anything else would be like eating the seed potatoes and destroying the future for people for short-term advantage now.
MONTAGNE: So when he's talking about eating seed potatoes, he means the source of the economy.
LANGFITT: Yeah. And the future of the Irish economy - that's the way he sees it.
MONTAGNE: So what are the domestic politics in Ireland on this issue?
LANGFITT: They're pretty significant (laughter). Writing in The Irish Times this morning, Noel Whelan - he's a columnist - he says turning down the money could be politically explosive. He called it the biggest challenge for Irish politics in many years. And, of course, this could touch on some of the same kind of populist political issues that we've seen in the U.S. presidential race and certainly here in the U.K. with the Brexit vote back in June.
MONTAGNE: How, Frank, is this going to play out?
LANGFITT: I think it's going to be resolved fairly quickly. The cabinet's actually trying to reach an agreement today on whether to appeal the EU ruling. This is a fragile coalition government in Dublin. But the expectation is they're going to work it out. Part of a deal, though, is probably going to involve recalling the lower house of the Irish legislature next week to debate the issue. It should be fascinating to hear people argue that Ireland should not take this enormous amount of money. Even if the government doesn't appeal the ruling, of course, Apple is going to. And that's expected to take years.
MONTAGNE: NPR's Frank Langfitt, speaking to us from London.
Thanks very much.
LANGFITT: Happy to do it, Renee. Transcript provided by NPR, Copyright NPR.