Crucify the People to let corporations dodge taxes. How many times have you heard a politician claim that Ireland needs to keep its 12.5 percent corporation tax rate to ‘attract investment’?

But now it has emerged that most of the giant companies do not even pay that rate.

Take GE Capital Aviation Funding, for example. This company which is based in Shannon, is involved in aircraft leasing. Last year it made profits of $765 million, making it one of the most profitable companies in the state. But it only paid $379,000 tax – which amounts to a tax rate of 0.5%.

Starbucks is another fine example of tax dodging. There has been an outcry in Britain over a Reuter’s report which revealed that it manufactures artificial losses so that it can reduce its tax bill. But few have noticed that its behaviour in Ireland is even worse.

Starbucks has been operating in Ireland since 2005 but its total tax bill since then has come to a mere €35,000. In other words, it contributed less to the Irish exchequer than one middle income PAYE worker.

GE Capital Aviation Funding and Starbucks are not exceptions. Ireland has branded itself as a global tax haven for the rich – and so its people must bear the main burden for funding the state.

Figures from the most recently published Revenue Commissioners report for 2010 show how it works.

Corporation Tax for Accounting Period 2008 in €million
Profits 65, 307

Allowances to write off as taxable Income 84, 360

Total Income and Gains 57,210

Deductions from taxable Income 5,241

Gross Tax Due 5 ,076

Reliefs 1, 058

Tax Payable 4, 004

Tax Received 3,923

This is a bizarre table – but it has been drawn down directly from the Revenue’s own figures.

The first obvious point is that the Revenue is notified of trading profits of €65 billion. Yet it only receives a mere €3.9 billion in tax. This represents an effective tax rate of 6 percent. In other words, companies pay less than half the official tax rate.

Second, allowances which enable companies to reduce their taxable income amounts to MORE than the actual profits declared. This absurd situation arises because Irish tax law is so generous to corporations and if the losses are not used in one year they can be carried over to another.

If one subsidiary of a corporation makes a loss, another subsidiary can write them off against its taxable income. But strangely workers who are told that their company has no money to pay redundancy money , cannot point to other profitable parts of a company to claim their due entitlements.

Individual companies used just some of these allowances in 2008, so their taxable income shrunk from €65 billion to €57 billion. They have stored up more in one great tax relief slagheap to be used in the future.

Third, even AFTER they claim for a host of allowances, they claim even more ‘deductions’ on this taxable income, amounting to billions of euro. Eventually, they arrive at a Gross Tax due of €5 billion but even this is whittled back by another €1 billion after more ‘reliefs’ are claimed.

At the heart of corporate Ireland stands a vast army of ‘tax practioneers’. These consultants charge high fees to fill in the forms that allow companies to claim allowances, deductions and reliefs.

Yet, strangely, the Revenue Commissioners co-operate actively in these dark arts.

A special Tax Advisory Liason Committee exists whereby ‘tax practioneers’ from the big accountancy firms meet with tax inspectors to press for ever more reliefs. The Revenue Commissioners regularly agree to ‘give due consideration’ to their proposals. The tax practioneers, who sit on these committees then advertise this fact to the High Net Worth Individuals under the guise of ‘wealth management.’

In other words, the tax dodgers do not just lobby – they are formally embedded with the Revenue Commissioners themselves.

The next time you hear an attack on public sector allowances or a demand for cuts in children’s allowances, just remember Starbucks and GE capital Aviation Funding.

If they paid a real, effective tax rate of 12.5 there would be little need for the suffering being imposed on the people.

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