“Even by the usual Brussels standards of economic malpractice, Tuesday’s €13 billion (US$14.5 billion) tax assault on Apple is something to behold. The European Commission decided that Dublin’s application of Irish tax law to an American company violated European antitrust rules. Orwell would understand.”
It’s hard to imagine a more perfect introduction to a more distasteful state of affairs.
Simply put, we agree with nearly all of the points made by the Wall Street Journal editorial board in its recent column on the European Commission’s attempt to undermine the sovereignty of Ireland and its legal arrangements with the Apple corporation. As the Journal observes, “Then again, this case isn’t about tax law. It’s about tax politics, and in particular the bureaucratic and left-wing frustration that low-tax governments are using normal accounting principles to deny high-tax governments more revenue booty.”
From one financial services-dependent jurisdiction to another, we in the Cayman Islands can certainly commiserate with the frustration that people in Ireland may feel at the latest economic assault from Brussels. Perhaps not since Attila the Hun plundered Europe has there been such a shameless invasion into the affairs of a sovereign nation.
It is almost unimaginable that a Brussels-based appointed “Competition Commissioner” (what on earth is a Competition Commissioner, and why would anyone want one?) would try to reach across the borders of Ireland and override decades-old decisions made by a democratically elected government, particularly ones that have proved so, dare we say, fruitful to the people of the country.
Let’s be clear here: Apple and Ireland, with eyes wide open and surrounded by lawyers, signed a legal and binding agreement. Our view (and theirs) is that it cannot be undone or overridden by a Brussels bureaucrat.
Appearing in today’s Compass is an opinion column written by eminent economist Richard W. Rahn (who is an editorial director of our sister publication Cayman Financial Review).
Dr. Rahn writes, “Forty years ago, Ireland was the poorest country in the EU; now it has the highest per capita income in the European Union, next to Luxembourg. The Irish wisely decided that the way to improve their people’s lives was by adopting economic policies that would lead to high growth. […] The strategy worked extremely well. Businesses flocked to Ireland with its pro-business policies. Employment and real incomes soared.”
And now the European Commission apparently wishes to undo Ireland’s hard work and reverse its successes, all in the name of “competition.”
Bringing this a bit closer to home, the U.K.’s Daily Telegraph aptly characterized the European Commission’s Apple action as “a textbook example of what is wrong with the EU, both economically and politically.”
In the opinion of the Daily Telegraph’s editorial board, since the June Brexit referendum, European officials have demonstrated the falsity of many of the “Remain” camp’s arguments, particularly the central tenet that a vote for “Leave” was a vote against “economic openness.”
According to the Daily Telegraph, “Indeed, the EU has done the opposite, showing that it is instinctively opposed to the free-trade and pro-business policies that are the best way to deliver prosperity, freedom and fairness.”
We’ll end this editorial by citing a passage from one of our own, which appeared in the Compass in November 2014 after European Commission President Jean-Claude Juncker, of all people, came under fire for deals made over the years by his Luxembourgian government and international companies:
“This Editorial Board supports Mr. Juncker and Luxembourg … based on the following principle: Every country must be able to write and enforce its own tax laws, without external interference, and without being compelled to act as another nation’s collection agency.”
What’s good for Luxembourg is good for Ireland, and what is good for Ireland is good for Europe, for Cayman, and for the rest of the world.