Joseph Stiglitz: ‘Cheating’ Ireland, muddled Europe

By Denis Staunton

Europe gets some things right, such as its ruling on Apple’s taxes in Ireland, but the euro itself is broken and European politicians lack the will to fix it. It’s unlikely to end well, says the US Nobel economics laureate.

Joseph Stiglitz was supposed to be talking about his new book about the euro, which he believes is in danger of destroying the European project. But when we meet in London this week the European Commission has just issued its ruling ordering Apple to pay €13 billion in back taxes to the Republic of Ireland, a move the Nobel economics laureate applauds.

He believes, however, that the Apple decision is calamitous for Ireland’s reputation, which he says was already damaged this summer by the 26 per cent growth rate recorded for GDP in 2015. This reported growth is widely perceived as a distortion of Ireland’s economic performance, which has been more modest.

“You know that in the long experience of increases in productivity that [level of growth] is not likely, or possible. But there’s no limit on how much you can cheat. You can increase your cheating in one year by that much,” he says.

“That 26 per cent growth rate sent a strong message about the magnitude of the corruption going on. It’s tax corruption. People are not paying the taxes that they ought to be paying, and it’s robbing developing countries, it’s robbing the United States.”

Although the commission says that Apple’s tax deal with the Irish authorities broke EU state-aid rules, there is no suggestion that the company sought to unlawfully evade paying its fair share of tax.

“In this particular case it was legal. In some ways the fact that it was legal almost makes it worse, in the sense that it says that Apple has been able to buy governments. Not in brown paper envelopes but in job creation. ‘We’ll give you 300 jobs and you give us $1 billion.’ You think about the trade-off,” Stiglitz says.

He believes the commission was right to challenge the Apple deal, arguing that the company cannot claim that the money was really earned in Ireland but should not be subjected to the normal Irish tax rate.

Sources:http://www.irishtimes.com/business/economy/joseph-stiglitz-cheating-ireland-muddled-europe-1.2776981

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