MEDIA RELEASE: Australia should heed Ireland’s approach to tax competitiveness with Apple - The Centre for Independent Studies
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MEDIA RELEASE: Australia should heed Ireland’s approach to tax competitiveness with Apple

Michael Potter

cis logo 640x360Ireland is telling Apple ‘don’t pay more tax’. This is a line that Australia should heed, according to Centre for Independent Studies economist Michael Potter.

“There is a lesson for Australia in this approach to tax competitiveness,” Mr Potter said.

“Ireland disagrees with the European Union (EU) ruling that tax arrangements provided an ‘undue benefit’ to Apple, with the EU demanding Apple pay more than $19 billion (€13 billion) in extra Irish tax.

“Ireland is reportedly planning to dispute this EU ruling. This is an extraordinary move — they are considering opposing windfall taxes revenue worth all of Ireland’s health budget. This shows the importance Ireland puts on having a competitive tax system.

“Australia would benefit from having a similar attitude.

“In this tax competitiveness race, Australia is clearly being left behind. Our company tax rate of 30% is more than double the Irish rate of 12.5%; it is substantially above OECD and world averages, while the company tax revenue we receive is much further above OECD average.

“Australia is currently seeing the costs of our ‘head in the sand’ approach, with non-mining investment at levels we have only seen once before — in the middle of the 1990s recession — and mining investment falling sharply.

“The decision also raises important issues of sovereignty: Ireland has had its sovereign decisions overruled by a supra-national body, the EU. This highlights the risks attached to handing too much power to unelected and unrepresentative international bodies. Some in Ireland are now reconsidering the value of EU membership.

“Australia should similarly be wary of plans for international tax coordination. These plans can just be code for a global cartel supporting higher taxes.

“In addition, Apple’s case shows it is a furphy that the US tax system completely offsets the impact of foreign tax systems, such as Australia’s (or Ireland’s).

“Apple is just as much affected by Irish taxes as Australian taxes, and Australian tax cuts won’t just be offset by higher US tax payments,” Mr Potter said.

Michael Potter is Research Fellow in the Economics Program at the Centre for Independent Studies and author of the report The case against tax increases in Australia: the growing burden