Ireland

Ireland unlikely to modify its business model

The Irish government’s decision to do without the handsome windfall payment in the form of back taxes to the tune of up to EUR 19 billion from the US corporation Apple has triggered political controversies in Ireland and further afield. Given that this windfall payment would be of a huge magnitude by Ireland’s standards, the country is passing up an opportunity to reduce its debt level very considerably at one fell swoop as well as to engineer an immediate improvement in its rating and debt sustainability. There are probably both political and economic motives behind the Irish government’s refusal to succumb to temptation. For one thing, the administration fears that the ruling could call the country’s fiscal sovereignty into question and entail an attack on tax rates which are low by EMU standards. For another thing, the pro-business government is concerned about the Emerald Isle’s economic model. Over the past…