A generation ago, the very idea that a British politician would go to Ireland to see how to run an economy would have been laughable. The Irish Republic was seen as Britain’s poor and troubled country cousin, a rural backwater on the edge of Europe. Today things are different. Ireland stands as a shining example of the art of the possible in long-term economic policymaking, and that is why I am in Dublin: to listen and to learn.George Osborne, writing in 2006.
After centuries of lower incomes, Irish average incomes are now 20 per cent higher than in the UK. After being held back for decades, the productivity of Irish companies — the yardstick of economic performance — has grown three times as quickly as ours over the past ten years. Young Irish families once emigrated in their millions to seek a better life overseas; these days it is young people across Europe who come to Ireland to find good jobs. Dublin’s main evening newspaper even carries a Polish-language supplement.
Ireland is no longer on the edge of Europe but is instead an Atlantic bridge. High-tech companies such as Intel, Oracle and Apple have chosen to base their European operations there. I will be asking Google executives today why they set up in Dublin, not London. It is the kind of question I wish the Chancellor of the Exchequer was asking.
It's called the Double Irish arrangement, and it's often combined with the "Dutch sandwich". Take the classic case of Google, as reported by Bloomberg. Google cut its taxes by a phenomenal $3.1bn over the last three years using the "Double Irish" trick to put most of its foreign profits through Dublin and the Netherlands to Bermuda. That reduced its non-US tax bill to just 2.4%. Ireland allows Google, Facebook, Microsoft Corp and many others to shunt profits around subsidiaries so that they escape even Ireland's own low tax rate.Polly Toynbee, writing in 2010.
Ireland allows them, quite legally, to pass the profits on to other tax havens that levy no corporation tax at all, paying only tiny sums in passing: Google put 92% of its billions of worldwide non-US profits through Dublin, and it paid Ireland just £18m.
Ireland turned away from making and exporting goods as the source of its new well-being toward the evanescent world of money and debt. On the one hand, Dublin became the single largest location outside the US for the declared pre-tax profits of American firms. On the other, Ireland’s balance of payment figures slid into the red. “Being prosperous would be replaced by feeling rich” is how [Fintan] O’Toole memorably captures the hidden agenda—hidden, perhaps, even from its initiators. Ireland was far from the only country to embrace it, but by O’Toole’s argument the other countries that did (including the UK) had longer and more robust traditions of relatively clean governance and civic behavior.Ian Jack, also writing in 2010.