The arrogance observed during the naughties seems to have resurfaced with full force. We’ve misplaced our footing and overlooked the significance of the €13 billion we received from Apple. While this sum may sound substantial, it barely scratches the surface of €114 billion allocated for public expenditure this year. On top of that, the State pension is costing over €10 billion annually. Simultaneously, without unquestioningly dispersing it to every 66-year-old, this sum could stretch further.
People have found amusement in estimating the quantities of children’s hospitals or bike sheds that the €14 billion, inclusive of interest, could construct. However, little focus has been placed on the fact that public spending has increased by 13 per cent compared to last year. As a lasting imprint, this government will leave behind a public expenditure at least 50 per cent higher than what it took on. Even after accounting for Covid, Ukraine, and inflation, this points to a fiscal discipline breakdown unprecedented in recent times. One can hardly remember the time when €13 billion meant something substantial to the State.
Despite these difficulties, it’s important to remember that Ireland is not a failed or poor state. The challenge lies in dealing with the inadequacies that plague our successes, and our collective arrogance. We’re reaching the end of a five-year political cycle, currently riding high on a wave of economic prosperity. Our immediate issue is not financial; it’s a matter of capability. We’re lacking the essential manpower and infrastructure to handle the existing demand. Large sums of money are being aimlessly spent to address our concerns, albeit with varying success rates. This has stimulated demand quicker than the ability to satisfy it. The Central Bank has noted that the government’s spending habits have escalated the domestic economy to a point where an average family needs an extra €1,000 annually just to maintain their lifestyle. Despite this, even more money seems to be earmarked for imminent consumption.
Prior to the arrival of Apple’s €13 billion, corporate tax rose to 28% more than the previous year totalling €16 billion, quadrupling the sum compiled in 2012. Nonetheless, the significance isn’t in the numbers but in the language. The notion of governmental and aspirational political party choice has entirely vanished. Post the announcement of discretion following Wednesday’s European Court verdict, the Taoiseach proceeded to unveil an innovatory national infrastructure policy for preschool age children. Despite this aligning closely to the tertiary education sector – primarily a state-operated, tax-reliant business – the real value lies in the fact that the state now heavily relies on corporation tax generated as much from intellectual property domiciled here as actual activities conducted here.
In the near term, the mass departure of foreign direct investment from Ireland is unlikely. The risk, however, exists in activities that occur elsewhere but are taxed domestically, due to the intellectual property behind these operations being located here. Presently, multinationals headquartered in Ireland are at a disadvantage when aiming to secure additional investment within their own worldwide organisations due to our infrastructural and housing capacity shortfalls. Our offering is no longer centrally tax-based; Ireland as a whole has diminished in attractiveness. Concurrently, we’ve become precariously dependent on tax revenues to the point where the Irish Fiscal Advisory Council estimated in June that, when deducting the surplus of corporate tax income, a €2.7 billion deficit is expected this fiscal year. Yet, the political discourse still revolves around increased spending, primarily recurrent expenditure, which is akin to using a credit card for grocery shopping.
Governmental expenditure has far exceeded Sinn Féin’s promises for 2020. In an alternative budget, Sinn Féin pledged to double child benefit payments in October and December. This universal approach, however, proves impractical and wasteful for children in disadvantaged positions: the evidence suggests that targeted services prove more effective. Ironically, this Sinn Féin policy is nostalgically reminiscent of when the Progressive Democrats hindered the expansion of early childhood care to favour a generic child benefit payment. It appears that the halcyon days of old have made quite the return.
The implications of neglecting to seriously consider how to limit and strategically manoeuvre spending carry a significant political price: more wasted years. This goes hand in hand with a rigid unwillingness to adjust the tax structure, despite blatant over-reliance on labour and corporate taxes. These foreign corporations contribute a considerable amount to income tax as well. Strategic actions to minimise inheritance tax are employed to evade an effective tax on wealth or property.
The fallout from all this affects the most economically disadvantaged children of the state. In the long run, a younger generation that is inadequately housed and insufficiently pensioned will be loaded with the task of supporting an ever-growing elderly population. This October, the British government is obligated to submit a mid-term financial strategy to the EU Commission. Ideally, it serves to secure the future; however, in reality, the government’s own fiscal policy of upping spending by 5% lies in ruin. Political parties draw attention to their disagreements, but truthfully, they are collectively marching to the tune of the same metronome. The fuss over Apple’s money is simply squabbling over pennies while the pressing matters go unaddressed.