Luke Holland ■ Tax haven Ireland to face UN spotlight over child rights impacts of fiscal policies
Ireland’s long-running battle with the European Union over Apple’s unpaid taxes has more than demonstrated the country’s dogged determination to continue facilitating massive levels of corporate tax avoidance. Pressure for reform in the ‘land of 100,000 welcomes’ is building, however. Next month in Geneva, Ireland’s tax policies will once again come under the spotlight when the United Nations Committee on the Rights of the Child considers evidence from civil society organisations. The meeting comes ahead of Ireland’s appearance before the Committee in early 2023, at which its compliance with the Convention on the Rights of the Child will be formally interrogated by a panel of UN experts.
The Committee has already set its sights on the human rights impacts of Ireland’s fiscal regime, particularly as they pertain to lower income countries, having raised the issue in November 2020. A coalition of Irish and Ghanaian organisations fighting for tax justice has now made a follow-up submission to the Committee setting out in detail the manifold ways Ireland siphons revenue away from poorer countries and the devastating human rights impacts this incurs.
Perhaps the best-known aspect of Ireland’s role in international tax abuse is its facilitation of profit shifting by multinational corporations. As the submission demonstrates, the legal structures offered by the country in order to enable such practices have evolved over time, but progress in putting an end to profit shifting has remained meagre at best. The government has used superficial reforms to argue it has closed loopholes, but the notorious ‘Double Irish’ tax avoidance structure has simply given way to the ‘Single Malt’ which allows companies to achieve the same result through alternative channels.
Ireland’s extensive network of 73 bilateral tax treaties, in combination with these ignominious fiscal structures, make it a prime destination for companies seeking to shift their profits out of other countries and thereby avoid paying their fair share of tax. What’s more, the country has been specifically targeting emerging African economies for such agreements in recent years, despite serious concerns that its aggressive negotiating tactics have led to deleterious outcomes for partners such as Ghana. Indeed, research carried out by the Government Revenue and Development Estimations (GRADE) initiative at St Andrew’s University shows that revenue lost to corporate profit shifting from the West African country in a single year would otherwise have saved the lives of 170 children. The Tax Justice Network’s State of Tax Justice report meanwhile estimates that Ghana loses US $166 million a year – the equivalent of 19% of its health budget – to cross-border tax abuse. In total, Ireland imposes revenue losses of some US $19 billion a year on other countries, according to our calculations.
When challenged about the nefarious impacts of its tax havenry, Ireland’s government has generally pointed to a 2015 spillover analysis commissioned by its Department of Finance which, the country argues, shows it has no negative impact on developing countries. Said analysis is seriously flawed however; it only examined 13 of the developing countries which receive investment flows from Ireland, and only 4 percent of the available data on Irish overseas investment.
Moreover, Ireland’s role in undermining human right in other countries is not limited to its direct facilitation of international tax abuse. Like all states that have signed up to the major UN human rights agreements, it is also subject to extraterritorial obligations to respect, protect and fulfil human rights through its participation in institutions of international governance.
These principles appear to have been ignored when Ireland fought hard to water down proposals at the OECD for a global minimum corporate tax rate, and thereby helped ensure the final agreement – ostensibly intended to end the ‘race to the bottom’ in corporate taxation – would bring little or no benefit for poorer nations.
Similarly, the country continues to resolutely oppose proposals for international tax talks to be moved from the OECD to the UN, and for the creation of a new global tax convention under the auspices of the same body. Both of these measures represent long-standing demands of civil society organisations and governments across the Global South, as lower income countries could participate on a more equal footing at the United Nations.
Having always valued its reputation as a champion of human rights and solidarity on the international stage, Ireland needs to deliver a sea change in both its policy positions and its comportment in tax negotiations if these values are to be reflected in its fiscal regime and relationships.
The submission to the UN Committee on the Rights of Child – Ireland’s Responsibility for the Impacts of Cross-border Tax Abuse on the Realisation of Children’s Economic, Social and Cultural Rights – was a collaboration between Action Aid Ireland, Christian Aid Ireland, the Global Legal Action Network, Oxfam Ireland and the Ghanaian organisations Isodec and Tax Justice Coalition Ghana.