Irish economy: Corporate tax windfalls and chronic inequality

By Donal Devlin

This week, two stories emerged about the Irish economy, or more accurately, about who is making a killing and who is struggling to make ends meet.

A report carried out by the ESRI found that real wages for workers fell by 3.3% in 2022, because of record levels of inflation, averaging at 8.4% per month. This is driven in no small part by the price-gouging and profiteering of energy companies and big businesses generally. For example, the profits of Centrica, the parent company of Bord Gáis, tripled to a record of £3.3 billion in 2022 and the value of the company’s shares stands at a four-year high. Meanwhile, rising energy prices continue to eat into the incomes of working-class people. 

On top of this, there is of course the ongoing housing crisis and the dearth of affordable places to rent or buy. This in turn is creating an unfortunately familiar situation in which many young people are considering emigrating, as educational and medical institutions from the likes of Australia and Canada bombard young people in Ireland with offers of work for better pay and conditions.

Inequality as a model 

All of this comes at a time when record profits are being made by big business, resulting in record corporate tax revenue. It is estimated that between 2023 and 2026 the state will have an eye-watering surplus of €65 billion. This is despite the extremely low rate of corporation tax, and all the loopholes available to businesses to evade it. This demonstrates that enormous profits are being made within the Irish economy while workers, in both the public and private sectors, struggle with cuts to their incomes and living standards.

The mantra of Ireland’s capitalist establishment – the media, main political parties and top civil servants – is that the attraction of foreign direct investment, via an ultra low tax regime, by multinational companies is essential for the development of the economy. Implied in this is that such development will invariably lead to an increase in living standards for working-class people. However, reality has a habit of undermining this argument, which in any case misses the point.

Low wages, high rents, lack of affordable housing and childcare, overcrowded hospitals and underfunded schools are what the majority of us experience for a reason: the capitalist system was designed that way. It’s why the top 1% of the population in Ireland owns 27% of the wealth  (€232 billion) while the bottom 50% owns just 1%. 

Even now the government has made it clear that it has no intention of spending the windfall it has received to tackle the chronic problems we are confronted with, e.g. no plans are in place to transition to a zero carbon economy. Its new housing plan announced this week will essentially be based on the utterly failed policy of incentivising developers to build homes at more affordable rates, by cutting the levies they pay to local authorities even further. 

Break with capitalism 

Instead of giving major subsidies to big businesses, corporate landlords and developers, we need policies that will prioritise the urgent problems we face. We need to substantially increase taxes on the super-rich and big businesses to fund measures such as a major programme of building public homes on public land; the creation of a one-tier public health service; free and massively expanded public transport; and a free, quality public childcare service. 

The reason the government won’t do any of this is because it is ideologically committed to prioritising the interests of big business and the super-rich, as well as being conscious that despite the extra tax receipts its system is actually in deep crisis. For example, many of the companies contributing to the windfall of corporate taxes are based in big tech, which is shedding thousands of jobs globally, including here in Ireland. 

Furthermore, the government wants to use any excess money it has to pay off the interest on Ireland’s debt, which will rise as the era of cheap money comes to an end for global capitalism. What this means is that the minimal taxes on corporate profits, themselves created by workers in Ireland and internationally, will be used to pay off other super-rich speculators on the financial markets. 

As the global capitalist system sinks deeper into its morass of multiple crises – war, climate change, pandemics – the urgency of building an alternative increases by the hour. This socialist alternative begins with taking the key monopolies that dominate the economy – from industry to retail to banking to agriculture to big tech – into democratic public ownership, under working-class control, as part of a plan to transform the economy to meet our economic, social and environmental needs.  

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