Corporation tax, fiscal responsibility and crises
Irish workers bound to pay!
19 July 2021
The Minister for Finance Paschal Donohoe.
While refusing to openly 'speculate on what my finished position could be' Paschal Donahue and the Irish government is set to comply with the global rate of corporation tax proposed at the last G7.
They have been left with little choice. Attempts to hold out on the 15% rate were causing “substantial reputational damage” according to John McHale of the Irish Fiscal Advisory Council and over 130 members of the OECD have already approved the plans with only 5 including the Dublin govt holding out in the hope that the US will revise the figure downwards. The IDA took the view that corporation tax is just one factor in attracting Foreign Direct Investment so they undoubtedly have plans to line the pockets of global corporations by other means at the expense of the working class. The government response, unsurprisingly, has been to seek methods for raising taxation for working people. While €500 million is being made available to link tax bands to inflation to counter the growth in prices, the recent finance bill makes around 100,000 new homeowners liable for increased property taxes.
The potential impact of a loss of approximately €2bn in corporation tax is also being obscured by the impact of the Coronavirus and the associated increased borrowing. While they mouth unconvincingly optimistic claims of a pandemic 'in retreat' they have backtracked to some degree on the Stability Programme Update proposals submitted to the European Commission in April, the 'near-balanced budget' that had been projected for 2025 has been dropped, taking advantage of a loosening of the purse strings by the ECB and internationally, and is now replaced by a projected deficit of €7.4 billion.
As a response to the housing crisis an additional €800 million is being made available for the capital budget. This budgetary expansion was bitterly opposed within the government, delaying the publication of the Summer Economic Statement (SES) but the fact that such an inadequate concession divided Fianna Fail and Fine Gael so bitterly highlights only the fact that neither are willing to make any serious attempt to resolve the housing crisis. The sum is completely inadequate in the first place and secondly it relies on the vulture dominated 'market' to provide housing. By the time the housing contractors have taken their inflated slice the budget's impact will ultimately result in a continued housing shortage, sky high house prices and continued homelessness.
The SES sets out the 'fiscal parameters' within which the details of budget 2022 will be set. Despite the increased borrowing these parameters still encompass the unwinding of PUP and other supports and are accompanied by warnings of 'trade offs' in spending which will include a resources grab around pensions to finance a “digital” and “carbon tax”; the latter in order to put an environmentally friendly facade on capitalism's increasingly catastrophic impact on the global climate.
The fiscal ripples on our shores are a mere indication of a global confluence of capitalist crises which are producing increasingly volatile conditions and are sure to come our way. As the Delta variety threatens to bypass existing vaccines, the economy fails and global temperatures soar, a global crisis is burgeoning. The working class are being made to suffer the consequences and this is producing eruptions of protest and revolt.
The capitalist class fears everything; inflation, debt, and recession, and they walk a tightrope between them. Mostly they fear the masses once the impacts of the various crises feed through. They gain in confidence from working class passivity and division. We need to build for resistance, political regroupment and revolution. The capitalist system must be overthrown.