Theres a lot of breathless posturing from the Government about the integrity of the tax system, post Apple. From the sound and fury one would imagine that the Commission (boo, hiss) had made a ruling that our 12.5% rate, blessed be its name, was in itself wrong. In fact all they have done is what they have done in numerous other cases – assert that state aid can be channeled by the tax system. Don’t believe me?
Here is a nice short information sheet on this.
While the Member States enjoy fiscal autonomy in the design of their direct taxation systems, any fiscal measure a Member State adopts must comply with the EU State aid rules, which bind the Member States and enjoy primacy over their domestic legislation.2 As early as 1974, the Court of Justice of the European Union clarified that the Commission’s competence in the field of State aid control also covers the area of direct business taxation. As a rule, fiscal measures of a general nature that apply to all undertakings without distinction fall within the remit of the Member States’ fiscal autonomy and cannot constitute State aid, since they do not selectively advantage certain undertakings over others. By contrast, fiscal measures that discriminate between taxpayers in a similar factual and legal situation constitute, in principle, State aid
This, in essence, is what the Commission are saying. They allege that in the operation of the corporation tax system Apple got a break not generally available. So far, so technical. There are dozens of instances where the same logic has been applied, across a wide variety of tax headings. Some of these include direct corporate taxes.
Now, maybe I missed it but I don’t recall seeing the white knights of FFLabagael (we need a composite word for the all but identical policies of FF, FG and Labour – feel free) riding to do battle on the principle of state tax competence. So, apart from the obvious issue of it being our turn on the griddle, why are they doing so now? And why on earth are they pinning so much on the issue of the RATE of tax, which while a source of annoyance to other states is not in the mix? [Update- Seamus Coffee has noted that there was a similar principle ruling before – see here – and again there was neither sound nor fury]
In doing so one could imagine they are being cunning and getting their spake in first, marking territory. Small dogs do that. So do large ones. Small dogs yap a lot also. We are getting into an unnecessary fight with a much more powerful adversary who is growling and snarling at another similar sized foe. Moreover, the first adversary will be required to be our friend post Brexit. After we have snapped and bitten them. Good plan.
Getting into a fight between the USA and the EU can only be a disaster waiting to happen, and we have waded in fist cocked like a drunk outside a kebab shop after a feed of vodka and redbull, convinced that someone is mocking us. That usually ends badly. So also can this. Either we annoy the EU on whom we rely whole and entire for our very existence as a tolerable place to live, or the USA to whom we are amiable drunks happy to rent out the place as a financial pump , for a few bob and the odd pat on the head. All to keep something that wasn’t being taken.