A new study has found that Ireland is the number one tax haven in the world. Researchers from the University of Copenhagen and the University of California noted that in 2015, foreign multinational corporations shifted $106 billion to Ireland in an attempt to protect their profits from taxation. This amount surpasses even the combined total for the Caribbean Islands, a notable refuge of tax avoiders, and is well ahead of other tax havens such as Switzerland and the Netherlands.

The report estimates that over $600 worth of multinational profits were shifted to tax havens globally and that Ireland accounted for over one sixth of this amount, an astonishing contribution for such a small country. That Ireland is a major tax haven should be no surprise. Our corporate tax rate is extremely low, the lowest in the Organization of Economic Cooperation and Development (the OECD is an organization comprising the worlds most developed countries). We offer multinational corporations based here a wide array of tax allowances and tax breaks, and the gap between corporate profits registered in Ireland and the amount of profits eligible to be taxed is large. In 2015, multinational profits of $144 billion amounted to just $65 billion of taxable income. In other words, less than half of the total corporate profits registered in Ireland were liable for any taxation whatsoever. For companies who know how to exploit our tax code, Ireland is indeed a very favourable environment. One report detailed how 13 of the top 100 companies with the highest taxable income based in Ireland paid less than 1% tax and amongst these, eight paid no tax whatsoever.

Irelands role as a tax haven was famously highlighted in 2016 when the European Commission ruled that Ireland had offered illegal state aid to the technology company Apple. The commission noted that favourable deals with the company had allowed it to pay just 1% tax on EU profits in 2003 and that by 2014 this figure had declined to just 0.005%. The Commission ruled Apple owed Ireland $13 billion in back taxes, but Ireland is in the middle of contesting this decision. Irish governments over the years have deliberately set Ireland up as a low corporate tax environment and the ruling threatens our status as a great little tourist destination for all those multinational corporate dollars.

There are strong pragmatic arguments in favour of retaining a low rate of corporate taxation. Investments by multinational corporations in Ireland have led to hundreds of thousands of jobs being created and there are fears that if the tax was raised these jobs would come under threat. For decades, Ireland has benefited from its low tax model for corporate profits. Starting in the 1970s and continuing up until today, it has been an important component in encouraging companies to base their operations here. It can be argued that having a low corporation tax actually increases the overall tax take since more companies base themselves here than they otherwise would, and we tax their profits, albeit at a very low rate. Furthermore, the increased employment that multinationals bring leads to increased collection of other taxes such as PAYE and VAT. Above all, it is argued that the increased investment resulting from our low tax status contributes greatly to economic growth, which in a capitalist system is one of the main aims of government. Hence all of the establishment parties (Fine Gael, Fianna Fáil, Sinn Féin and Labour) are in favour of retaining the low corporate tax rate and only those of the radical left favour increasing it.

Nonetheless, the economic model favoured by the establishment does have some downsides. As more multinationals book their profits through Ireland, we are becoming dangerously over-reliant on the corporate tax take. Last year, 16% of total government revenues came from taxation on corporate profits (up on previous years) and 40% of that came from just ten companies. Government finances are thus becoming more and more vulnerable to the profitability of a small number of large multinational companies. In the event of another global recession, these profits will come under threat and it is possible that at least some of these companies will leave. We cannot take for granted that the profits of multinational corporations will be there in perpetuity for us to benefit from. The clue is in the name; multinational. These companies will stay for as long as it suits them and then leave when it does not, as Dell did in Limerick during the last recession, with devastating consequences. It is not a sustainable economic model for the long-term.

The sustainability of Irelands low corporate tax model is further undermined when one considers that US corporation tax has been lowered and is likely to be lowered again, and that the EU is looking at ways for digital companies such as Facebook and Google to be taxed in a fairer way (i.e. not the way we do it). Additionally, our reliance on multinational corporations arguably makes Ireland less sovereign. As our government focuses more and more on attracting and retaining multinational investments our ability to freely legislate and regulate is harmed. With a dependence on the multinational sector, we cannot act in a way that harms their interests. A case in point is Facebook. Since they have their European headquarters in Dublin, it fell to Irish regulators to ensure that the global giant complied with EU law. But given our reliance on companies such as Facebook (and combined with a general government aversion to regulation) the Irish government gave this company a free ride to such an extent that European regulators have had to step in and take over, the result being a much-changed data protection environment with the new GPDR rules. If Ireland was not so reliant on cosying up to the likes of Facebook and Google, our ability and desire to protect our own citizens data would have been enhanced.

So, what? I hear you ask. These companies provide good jobs for Irish people and keeping them here requires that we regulate them lightly and tax them at a low rate. This is not necessarily true. On the contrary, there is a strong argument to be made that Irelands corporate-friendly tax environment is not the key factor in promoting the presence of multinational corporations. What may be just as important, if not more so, is that Ireland has a highly educated English speaking workforce with access to European markets through membership of the EU, and enjoys political stability, a strong legal system and a favourable industrial relations environment (i.e. favourable to corporations).Indeed, it has been argued that up to half the jobs from the US multinational sector do not rely on our low tax rate and those from Europe not at all. To take the anecdotal example of the town where I live, the two American multinational corporations have been massively expanding the number of staff they employ. This can’t be due to any tax benefits since they are already based here and hiring extra staff won’t reduce their tax bill. Rather, the increase in staff is most likely due to the skillset of the English speaking (although heavily accented) local population.

Still, why risk raising taxes on these companies when they are a vital part of the massive economic growth that Ireland has been experiencing in recent years? It is true that being a tax haven has contributed to massive economic growth in Ireland. For decades, Ireland has been one of the fastest growing economies in the OECD. Ireland underwent a rapid transformation during the Celtic Tiger years and following on from the economic crash of 2008 and the subsequent recession, has recovered to the point that some economists now describe Ireland’s economy as the Celtic Phoenix (a phoenix being a mythical bird that gains new life by arising from the ashes of its predecessor). Undoubtedly, much of this economic growth can be attributed to a multinational sector that is indeed attracted to Ireland by its low corporation tax. But the multinational sector also massively distorts the economy. In 2015, Ireland officially grew by 26.3%, an outlandishly large percentage that led respected economist Paul Krugman to coin the term “Leprechaun Economics”. That figure was somewhat of a one-off in that it came amidst a global crackdown on tax avoidance and companies worldwide scrambled to move their paper assets (such as intellectual property and aircraft leasing assets) to safe havens. Some €300 billion in assets, mostly in the form of intellectual property, found its home in Ireland. But even without that one-off shifting of corporate assets to Ireland, our growth rate remains artificially inflated by the tax-saving activities of multinational companies—last year’s figure of 7.3% would likely be 4.9% if based on actual domestic activity. Nonetheless, 4.9% is still a highly impressive growth rate and is one that is unmatched elsewhere in the developed world.

This begs the question, who is benefiting from this increased economic activity? In a tax haven, the big multinationals benefit disproportionately from economic growth. According to the study that designated Ireland the worlds biggest tax haven, for every €1 spent on wages here, corporations made €8 in profits. For non-tax-haven countries, multinational companies typically make 50c profit for every euro spent on wages. Ireland is a kind and gentle place to be if you are multinational corporation. But when we take a broad look at society we can see that high growth rates do not necessarily translate into social progress for most people. There are up to a million people living in poverty and thousands of Irish citizens are homeless (a third of whom are children). There has been a proliferation of low income jobs and zero-hour contracts. Hundreds of thousands of patients are not receiving treatment but are instead placed on lengthy hospital waiting lists. Clearly, high economic growth is not necessarily a panacea for the problems that Irish society faces. The Celtic Phoenix is appropriately named as for the majority, increased prosperity is indeed a mythical creature. Not only is economic growth not having an adequate effect on the well-being of society, it is also once again putting us in danger of an economic crash. Two weeks ago, the OECD warned that the Irish economy was in danger of overheating and with house prices rocketing, they argued that we are potentially in the midst of another property bubble. It is noteworthy that the last time the OECD warned Ireland about a housing bubble was in 2006, mere months before the market crashed. In short, we have a massively expanding economy, distorted by a multinational sector that parks its assets here and benefits massively from doing so, which is not leading to any improvement in living standards for most people and which is at the same time potentially placing us at risk of another economic crash. What is to be done then?

What might be more beneficial for societal well-being than a focus on promoting economic growth is an increased emphasis on redistribution. There are several arguments in favour of carrying out redistribution through increased taxation on the corporate sector, i.e. by raising our corporate tax rate and closing the loop holes that allow companies to pay much less than the headline rate of 12.5%. Raising the headline rate would in the short term provide extra revenue that could be invested into much needed housing or better health services, or even used to pay down some of our massive national debt which is still devouring our resources due to crippling interest payments. One argument against this is that it will encourage companies to leave. That is probably likely (although far from certain) but in the long term this may not be a bad thing—the companies that depart likely would do so at some point in the future anyway. In the international race to the bottom in taxation it is inevitable that we will be outdone in the future, especially if the EU clamps down on our corporate tax rates or if the US further cuts theirs. If we raise corporate tax moderately, many companies that have poured millions into hiring and training staff and building facilities will stay. These companies will be those that are committed to Ireland due to reasons other than our generous rate of taxation and this would provide Ireland with a far more stable and sustainable tax base and allow us to adequately plan for the future.

Planning for the future is vital for Ireland. Given the openness of our economy any international economic difficulties that arise will hit us harder than most. There is no shortage of problems coming down the line; Brexit, further Eurozone debt crises/scares, a brewing transatlantic trade war and increased stock market volatility are just some of the possible sources of economic problems in the future, not to mention the fact that even a healthy well-functioning capitalism is cyclical in nature and periodic global recessions are inevitable. Basing increasingly large parts of government revenue on tax avoiding multinational corporations makes bad economic sense for the future.

There are also moral arguments in favour of increasing taxes on corporations in Ireland. Firstly, there is the issue of fairness. Is it right that a company that makes 45 million euro in profits gets taxed at 12.5% (assuming they are not taking advantage of any of our numerous loopholes), whilst a single worker who earns €45,000 gets taxed at roughly 25%, on top of paying motor tax, property tax, television licence, VAT and a myriad of other expenses the government imposes on people. Could not the burden be eased on the worker, who of course is one of the main facilitators of corporate profits, a little? Might the highly profitable multinational corporation be taxed a bit more? I think it is a reasonable and fair argument to make.

There are also issues of fairness at play when we look at the global economy as a whole. By offering corporations a low rate of tax and multiple loopholes with which to avoid even that low rate, Ireland is facilitating the tax avoidance of major, highly profitable multinational corporations who pay no taxes at all in the countries where they actually make their profits. We allow these companies to funnel their vast earnings through Ireland; we cream a little off the top for ourselves, and the companies keep the lions share. Excuse the French, but it’s a shitty thing to do—especially as we are one of the world’s wealthiest nations.

We are an important component of an international system that is designed to allow corporations keep nearly all of their profits whilst contributing virtually nothing back to the societies in which they operate. It is a system that for decades has ensured the rich get richer and the poor get poorer, on a global as well as a national scale. Much has been made about whether the EU really has Ireland’s back in regard to the Brexit negotiations and whether or not the EU would sell us out when it comes to the crunch. We should perhaps be asking ourselves what sort of partners we are to the people of the EU. We are the main player in an international tax avoidance system that costs the EU an estimated 20 per cent of their tax take, essentially depriving our fellow Europeans of government services. Other EU countries could be forgiven for thinking “with friends like these, who needs enemies?” It is not just the rest of the EU that we harm with our tax policies. An Oxfam report estimates that tax avoidance by multinationals costs Third World countries at least $100 billion per year. As a relatively wealthy country, we should ask ourselves if we are happy to be the poster child for a system that robs underdeveloped countries of an opportunity to lift themselves out of poverty.

Ireland is a well-developed country and despite our multiple problems, we have a relatively high standard of living. Offering tax breaks and a low rate of tax to multinational corporations perhaps made sense at a certain stage of our development. However, it can now be argued that the problems that such a tax system brings potentially outweighs the benefits. We have become dangerously over-reliant on the multinational sector. Our sovereignty is diminished. Our economy is over-heating to such an extent that some experts foresee another property price crash. By closing tax loopholes and increasing corporation tax we might be able to plan better for the future and invest more in services that improve the lives of people. Some companies may leave but the ones who remain will be those that are here for the skills of Irish people and not for a cheap buck. This would be a much more sustainable basis for the future prosperity of the Irish people. Even more significantly, we could make a real contribution to a more equitable global system. Our status as a tax haven is robbing the opportunity of other nations, especially poorer nations, to enjoy their own economic development. It’s time to stop being such wee scabs.