Never in the past 45 years of Ireland’s membership of the European Union has its continued membership looked so unattractive. In light of the United Kingdom’s decision to withdraw from the EU in June 2016, there have been faint whisperings that Ireland could possibly follow suit. But those murmurings are beginning to grow slightly louder as the months since Brexit have passed. Now- thanks to the help of Nigel Farage and his band of Eurosceptic brothers- this movement has a name: Irexit.
Last month, the Irexit movement gained traction as the former UKIP leader was the main attraction at an RDS conference entitled: Irexit: Freedom to Prosper. The audience of several hundred people comprised a broad cross-section of society: young and old, conservative and socialist, male and female. With none of the major political parties on this island even entertaining the idea of Ireland leaving the EU, the event was not heavily publicised. However, that is not to say it did not leave its mark.
The main argument centred on the fact that while Ireland has undeniably enjoyed countless benefits since joining the then EEC in 1973, whether it will continue to reap the rewards of continued membership is highly questionable. A grave concern of continued membership is the threat to our 12.5% corporate tax rate which has taken several bashings in recent times but remains intact (for now). Its importance cannot be underestimated, for it serves as a major attraction to multinationals in deciding to set up their European operations in Ireland.
However, the European heavyweights of Germany and France are resolute in their desire to consign our 12.5% rate to the past. French President, Emmanuel Macron has been particularly forthright in expressing his wish for a Common Consolidated Corporate Tax Base (CCCTB) to be introduced- a key part of his plan for “ever closer union” in Europe. But who says such integration is a positive thing? From an Irish perspective, a harmonised tax rates would be anything but positive. Seamus Coffey, head of the Irish Fiscal Advisory Council has warned that CCCTB is “a bigger threat to Ireland than Brexit.” Indeed, if Ireland were to lose control of its corporate tax policy, it would be losing control of something that contributes to over a quarter of our national income.
Hardly a month goes by now without somebody attacking our corporate tax rate, hailed as being “the most important use we have ever made of our national sovereignty” according to Cormac Lucey of the Irish Management Institute. At the World Economic Conference in January, the European Tax Commissioner, Pierre Moscovici issued a stark warning that Ireland could not continue to veto the attempts in Brussels to harmonise corporate tax rates: “We cannot have one country holding up policies that benefit the entire EU.” He is also on the side of Macron in arguing that foregoing national tax sovereignty is not important if it helps create a new “European sovereignty.”
The order of the European Commission for Apple to pay “back-taxes” of over €13bn to the Irish Government also highlighted the fact that Ireland is dancing more and more to the tune coming out of Brussels. The treatment Ireland afforded Apple since they set up operations here amounted to illegal state aid in the opinion of the Commission. However, their presence in Ireland has provided Ireland with numerous benefits including a plentiful supply of jobs, economic growth and regional development. As Europe becomes increasingly integrated, the daunting prospect of a harmonised corporate tax rate looms large and as such Ireland’s ability to attract and reap the benefits of the presence of multinationals like Apple becomes severely diminished.
Moreover, it is apparent that the monetary policy imposed by the European Central Bank (ECB) does not suit all Eurozone countries. It is irrational to think that a common monetary policy will align with the economic needs of each of the 19 countries in the Eurozone. Ireland has suffered greatly from such standardisation. From 2004-2006, interest rates were simply too low for an Irish economy that was overheating and in drastic need of cooling down. Cheap credit was the very thing Ireland did not need at a time when the Celtic Tiger was roaring and the property bubble was inflating. However, the low interest rates imposed by the ECB fanned the flames of unsustainable economic activity that was in need of tempering not stimulation.
Fast forward to 2010-2011 and this time Eurozone interest rates were much too high for Ireland’s needs as a depressed economy in dire need of an economic stimulus. Low interest rates-which serve as a mechanism to boost economic activity by reducing the cost of borrowing money- was the very thing this country needed to kickstart the economic recovery. However, the high rates foisted on us from Brussels prolonged the economic depression unnecessarily. In both these situations the common interest rate imposed on Ireland by the ECB, was a rate that was perfectly aligned to the happenings in the French and German economies.
Cormac Lucey also spoke at the conference of how numerous people in Ireland are misguided in their perception of the benefits of continued EU membership. People reason that because the EU has served Ireland well in the past- which it undeniably has- it will surely continue to do so in the future. However, to extrapolate this would be a fallacy. Just because something was good in the past does not mean it will continue to be good in the future. We should know this all too well in Ireland with the recent housing bubble. Property prices were never going to continue rising inexorably but rather, would almost certainly dip at some stage. Similarly, membership of the EU does not necessarily have to continue being beneficial indefinitely.
The loss of Britain almost certainly reduces the attractiveness of membership. Ireland is now likely to become a more peripheral figure at the European table and its ability to assemble a blocking vote to undesirable European reforms is now greatly diminished. The UK is also historically an intergovernmentalist nation, meaning that it has always been against the idea of creating a European superstate, or a United States of Europe. The departure of Britain allows the “federalist” countries like France, Germany and Italy to take more control. And with those countries in the driving seat, there is only one place the European project is headed and that is to the “ever closer union” that Macron so greatly strives towards. This new Europe would mean a unified budget, a common social policy and most pertinent for Ireland, harmonised corporate tax rates.
The purpose of this article is not to advocate Irexit -because pulling out of the EU at this juncture would be a grievous act of self-harm- but rather to highlight that the idea of leaving the EU should not be the taboo subject that it currently is in this country. The tweet by Foreign Affairs Minister Simon Coveney in the wake of this conference that “support for the EU is stronger than ever in Ireland” accompanied by a poll depicting 87% of Irish people saying Ireland has benefited from EU membership misses the point. Yes, Ireland has benefitted unquestionably from its EU membership and all the economic data would support this view. However, the question is whether Ireland will continue to reap the same benefits of being part of a European project that is now unrecognisable from the one we joined in 1973.
Without a major political party calling into question Ireland’s membership of the EU, it is widely viewed that Euroscepticism on this island is reserved for the Irish equivalent of Nigel Farage- eccentric individuals, who are seeking to promote themselves through a populist movement. However, in truth this is unlikely to be the case. Many forget that Ireland was the only EU country to reject the Nice Treaty in 2001. More pertinent however, was it being the only EU country to initially reject the Lisbon Treaty in 2007- a pact which proposed a significant step-up in European integration.
So, instead of being smug about the UK’s faux pas in leaving the EU, let’s cast aside our “anglophobia” and begin debating the merits of our continued membership of a rapidly changing European Union. After all, Ireland’s EU membership is something that is becoming less and less attractive by the month.
Neil Stokes – Politics Writer