Dawn J. Bennett, host of Financial Myth Busting with Dawn J. Bennett, recently interviewed John Browne, a former distinguished member of British Parliament who served on the Treasury Select Committee and as the Chairman of the Conservative Small Business Committee. Today, Browne is a Senior Economic Consultant at Euro Pacific Capital.
In his interview with Dawn J. Bennett, Browne discusses a recent article he published titled, “Apple Tax Grab by EU Invades IRS Airspace.” The article explains how the EU has ordered that the Irish government granted Apple undue tax benefits and that the European Commission issued a penalty to Apple of $14.5 billion plus interest, making it the biggest tax penalty ever.
The European Commission is moving to withdraw the boundaries Ireland had set up to draw in the world’s largest corporations. According to Browne, the issue is very complex.
“Perhaps with an eye on the vast amounts of U.S. corporate cash that’s sitting in Ireland which doesn’t want to come to the United States and pay 35% tax, the European Union may have decided that Ireland was in effect offering Apple a sweetheart deal that amounted to state aid which is actually illegal under the EU rules,” said Browne.”
He continued, “The unelected European Commission dreamt up a theoretical, additional retroactive tax that Ireland must charge Apple, but the Irish government and Apple—the largest tax payer in Ireland—both state categorically that there was no sweetheart deal and are appealing the case to the European Court which will probably take three or four years, but the European Court is notoriously subject to political pressure, so the eyes of the corporate and individual taxpayers of the whole world will be focused on this Court’s decision because it’s to oppose a retroactive new tax. It will be revolutionary for taxpayers throughout the world.”
The EU’s ruling threatens the country’s reputation as a low tax nation, according to Browne. These companies that have come to Ireland for the low tax have created high-paying jobs, particularly in the high-tech industry, and contribute greatly to the nation’s economic growth and prosperity. Additionally, the ruling challenges the freedom of the country to make its own tax rates.
“We’ve all got to wait for this Court’s decision to even have a view on that, but if the Court decides in favor of the unelected European Commission, I think it will be awfully tempting for Ireland to join Great Britain in exiting the European Union and coming back much closer to Britain, outside the EU,” said Browne.
There are also many other companies that have done the same as Apple in using Ireland as their headquarters. Browne explained that if the Court rules in favor of the European Commission, then businesses like Amazon, Google, Starbucks and Microsoft will be on the line. He noted that in addition to the low tax rate, Ireland is attractive because it’s an English speaking country that uses English law, which is the same as American law. Also, they have close relationships with the U.S. and former UK Commonwealth and colonial countries, such as Canada, Australia, South Africa, and India.