How the EU’s decision on Apple explains why Brexit happened

On Tuesday morning, the European Union’s governing body ruled that one of its members, Ireland, broke its rules by allowing US-based Apple to pay a 1% tax rate – and sometimes as little as 0.0005%. Ireland’s regular tax rate is 12.5% ​​and EU rules state that members cannot give special benefits to sole proprietorships, even if it is the company the most popular in the world.

Under the EU ruling, Apple would be required to pay Ireland more than $14.5 billion in back taxes. Apple and the Irish government plan to appeal.

That’s a huge amount of money for a small country like Ireland, which suffered terribly after the 2008 financial crisis and required a massive EU bailout. Many in Ireland are salivating over the kind of public infrastructure or personal tax relief that $14.5 billion could be spent on. The sum is roughly equal to the whole of Ireland’s health budget, to put it into perspective.

Others, however, see the decision as the exact reason why Ireland, much like the UK did with its Brexit vote, must leave an interventionist, anti-sovereignty European Union.

To put the question in a different way: Did Apple, in collusion with the Irish government, rip off the Irish public by arranging a huge tax break? Or has the European Union simply undermined Ireland’s economic model and stripped the country of its competitive edge, jeopardizing Ireland’s long-term growth?

Much of the debate across the Irish Sea in Britain in the run-up to their referendum on EU membership in June centered on the idea that bureaucrats with no allegiance to Britain were sat in Brussels and wrote their laws. Supporters of a “Brexit” have argued that leaving the EU would allow the country to “take back control” of its economy and its borders.

After the EU’s decision on Apple and Ireland on Tuesday, one of Brexit’s most vocal leaders, Nigel Farage, tweeted that the EU was ‘undemocratic’ and ‘doomed’, and included a video of him on a TV show saying “Across the whole continent, people are saying, ‘Why are our laws made anywhere else?’”

Others started using the #Irexit hashtag, or argued that it was the EU, not Ireland, that had breached its treaty obligations to its member state.

Mehmet Simsek, Turkey’s Deputy Prime Minister, even took the opportunity to suggest that Apple move from Ireland to Turkey, which is not an EU member, where it would be “happy to provide incentives more generous taxes.

And despite the promise of an unprecedented injection of tax revenue, the Irish government plans to appeal the decision.

“This is necessary to defend the integrity of our tax system, to provide tax certainty for businesses and to challenge the encroachment of EU rules on state aid in the sovereign competence of Member States in matters of taxation. “, said Michael Noonan, Irish Minister for Finance, in a press release.

Apple will also appeal. At the heart of their argument is the denial that they got special tax rates that others don’t have access to.

“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Irish tax laws and overturn the international tax system in the process,” read a statement from Apple chief executive Tim Cook. . The decision, he said, would have a “profound and detrimental effect on investment and job creation in Europe”.

“Under the Commission’s theory, every business in Ireland and across Europe is suddenly at risk of being taxed under laws that never existed,” Cook explained.

Ireland’s second and third largest parties appeared to align themselves with the ruling Fine Gael party in opposing the decision. Spokespersons for Fianna Fail and Labor said it went against their understanding of Ireland’s ability to set its own tax rules and expressed concern that if appeals failed, multinationals would lose confidence in Ireland as an investment destination. Apple employs around 6,000 people across Ireland and has made proposals to keep those jobs there.

Much further to the left of the political spectrum, the Social Democrats, Ireland’s newest political party, echoed the resentment towards Apple that many Irish citizens expressed throughout the day on social media.

“While small and medium-sized businesses, which employ seven out of ten people in the private sector, struggled throughout the recession, with many going to the wall, this multinational giant was paying the bare minimum in taxes,” a statement said. published on their website.

© 2016 The Washington Post