According to his article in the Daily Telegraph, Boris Johnson is mightily confused about the EU’s competition chief, Margarethe Vestager. Despite his claims, she is not ‘left wing’, but a social liberal- so on the right of Danish politics. He also suggests she’s straight out of ‘Scandi-noir’ series Borgen. While the political series Borgen isn’t always easy viewing, I’m not sure it compares with The Killing or The Bridge when it comes to the murder headcount!
More seriously, Johnson suggests that, in trying to get Apple to pay up tax that it owes, the European Commission is on some kind of megalomaniac land-grab. In doing so, Johnson places himself firmly on the side of tax fiddlers and against the interests of the vast majority of British businesses and people.
Despite what Johnson misleadingly suggests, the European Apple case has got nothing to do with headline corporate tax rates. Instead it’s to do with whether a very small number of corporate giants are able to rip us all off, and gain a competitive advantage in the process.
What the Commission objects to - reasonably enough- is special tax deals being given to individual companies, that ordinary, smaller businesses can't access. Apple seem to accept that they have paid about 2% tax annually in Ireland, when the headline corporate tax rate is 12.5%. That reduction could have been legitimate; if, for instance, they used tax breaks open to all similar companies. But the evidence gathered by the European Commission suggests that Irish officials effectively reverse engineered a tax deal specifically for Apple, revising their calculations down to the amount of tax that Apple would ‘accept’.
These kinds of deals are simply not open to the vast bulk of companies. You can hardly imagine a small businessman or woman negotiating with the tax man in this way; yet, that is what Apple and the Irish tax authorities may have done.
This is a serious accusation, and it’s up to Apple and the Irish government, in my view, to prove that it didn’t happen. They need to do this because otherwise, any claims that we’ve got genuine free trade in the EU are farcical.
If the European Commission wins this case, the big winners will not be some Brussels bureaucrat, as Johnson claims. Instead, they will be Irish taxpayers- to whom the unpaid taxes will be refunded- plus those smaller IT outfits which simply can’t compete with giants like Apple by striking these kinds of sweetheart deals.
So what’s the lesson of this tale? First, if I ever bump into Boris Johnson, I’ll lend him my Borgen box-set. Second, he should get his facts right before standing up for the interests of massive multinational companies, to the detriment of smaller companies and ordinary taxpayers.