Imperial powers were the ones who once divided and ruled – now it's corporations like Apple

It is painful to think what position HM Treasury will be in in these sorts of scraps, post-Brexit

Tuesday 30 August 2016 19:17 BST
The appeal comes amid a debate over the amount of taxes paid by corporations
The appeal comes amid a debate over the amount of taxes paid by corporations (AP)

In recent decades, the world has become used to seeing huge and powerful corporations overwhelm small and feeble nation states. In a world of footloose corporate habits, where “intellectual rights” can be relocated on a keyboard stroke, and where “tax competition” is as important, if not more so, than conventional competition on quality and costs, then countries have little choice, though they’d hate to admit, but to bow to corporate pressure.

Such was all too obviously the case with Ireland, virtually bankrupted by the global financial crisis – and Apple, the world’s richest company by some measures. In return for parking some of its facilities and creating jobs in the Republic, Apple was, we now learn, offered a tax rate of less than 1 per cent according to some, or not more than 3 per cent even on more conservative estimates.

Thanks to the European Commission, which receives little gratitude whatever it does, Europe’s citizens have discovered the full scale of this abuse – and also found themselves, through the EU Commission, in the unaccustomed position of being able to do something about it. Thus, with luck, will Apple to be forced to pay a tax bill to a tax authority that, in truth, doesn’t wish to receive it. Strange as that may look, it amounts to tax justice, an all-too-scarce commodity nowadays.

The EU’s move also underlines some wider issues. The first is how the world responds to over-mighty business. It has, in broad terms, failed in recent decades to tame the banking and finance sector in particular, with the baleful consequences the whole world is living through. Much the same may now be said for the behemoths of technology. Here governments in the West, as well as emerging and developing economies, are being deprived of hundreds of billions in tax revenues. The last time such a phenomena stalked the world economy it was the era before the First World War in the United States, when the Apples, Amazons and Googles of their time – Standard Oil, US Steel, JP Morgan, US Tobacco and the rest – were compulsorily broken up by America’s famous “trust busters”. In later decades, the likes of General Motors and IBM regained more of their clout over government (“What’s good for GM is good for America”, as a GM boss once supposedly said) and the links between government and corporate America became closer again. As late as a few years ago, the automotive giants were still influential enough to secure US Treasury-funded bailouts of their own; it was perhaps more than coincidence that in 2010 some flimsy defences against massive presidential campaign spending by companies were lifted by the courts. Gradually, business in the US and elsewhere has assumed much of its late Edwardian pomp, complete with obscenely rich bosses.

As with the mood 100 years ago, so now; populations want these hugely powerful companies taken down a peg or two. And yet internationally, beyond the borders of the EU, there is remarkably little effective cooperation on fixing these abuses – or even shutting down the tax havens sued by organised crime to launder their profits. The EU, by dint of its sheer size as marketplace, has the stature to stand up to the likes of Apple, but even so we can be sure that the accountants and lawyers employed to, entirely legally, minimise Apple’s tax bill will be looking for new loopholes and “tax efficiencies”.

It is painful to think what position HM Treasury will be in in these sorts of scraps, post-Brexit. It could follow the Irish example and leave these enterprises virtually untaxed in return for locating jobs in Britain; in which case our European neighbours would be entitled to object to unfair “tax competition” on such a scale. They might well retaliate by restricting access to the single market still further. We would all be the losers then, except of course for global corporations like Apple, which would find no difficulty in exploiting these arguments to their best advantage. It used to be imperial powers that followed the maxim “divide and rule”; now it is imperial corporations who enjoy that prerogative.

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