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AMID THE FALLOUT from last week’s European Commission ruling that Ireland must recover €13 billion in back taxes from Apple, the debate has widened to the role of multinational companies as a whole, in our economy.
On Sunday’s Marian Finucane show on RTE Radio One, tax lawyer and commentator Suzanne Kelly claimed that multinational companies in Ireland pay 80% of corporation tax, 50% of PAYE and VAT, and 92% of customs and excise.
And during Wednesday’s Dáil debate, Fianna Fáil TD Jim O’Callaghan echoed the first two of these claims.
Several readers got in touch to ask about this, including Mike in Ballinteer in South Dublin, and Joe Kennedy in Cork, so we checked it out.
(Remember, if you hear big claims over the airwaves, email factcheck@thejournal.ie or tweet @TJ_FactCheck).
We’re going to assess each claim individually.
What was said:
You can listen to Kelly’s claims in full here and read Jim O’Callaghan’s comments here.
But since the original requests we got from readers related specifically to Suzanne Kelly’s comments on Marian Finucane, this is the statement we’re focusing on.
In response to a listener who had accused “Apple and their likes” of paying “peanuts” in tax, Kelly said:
80% of corporation tax is paid by the multinationals. 50% of PAYE is paid for by the multinationals. 50% of VAT is paid for by the multinationals. And 92% of customs and excise is paid for by the multinationals.
Claim 1: Multinational companies pay 80% of corporation tax in Ireland
Verdict: TRUE
In response to FactCheck’s request for evidence on all claims, Suzanne Kelly directed us to this October 2014 report by the Statistics and Economic Research Branch of Revenue.
On page seven, the report states that from 2008 to 2012, 80.58% of all corporation tax was paid by companies assigned to the “large cases division” (LCD).
These are big companies and high net-worth individuals which exceed certain turnover and tax thresholds, but they are not exclusively foreign-owned multinationals.
Some MNCs are not LCDs, and some LCDs are not MNCs.
However, the same report states that multinational companies (MNCs) “match fairly closely” with companies in the large cases division, so there is considerable overlap.
And the report also states that from 2008-2012, MNCs were estimated to have paid more than 75% of all corporation tax (over €15 billion out of €20.5 billion), and in 2012 specifically, they paid more than 79% (€3.4 billion out of €4.3 billion).
In a subsequent report on the tax take in 2015, the Statistics and Economic Research Branch stated that “Foreign owned multinational companies account for around 80% of corporation tax receipts…”
Since net corporation tax receipts amounted to €6.873 billion in 2015, this suggests foreign-owned MNCs paid €5.498 billion in corporation tax last year.
The same report found that LCDs paid 77% of corporation tax. With MNCs paying “around 80%”, this further supports the high level of overlap between the two categories.
Unfortunately, the report doesn’t give raw numbers for corporation tax paid by MNCs specifically, and Revenue was unable to provide them, but the evidence available is enough to warrant a verdict of TRUE.
Claim 2: Multinationals account for 50% of PAYE
Verdict: UNPROVEN
The first thing to note here is that PAYE is an income tax deducted at source from the wages of workers. So it is not multinational companies who “pay” PAYE, it is their employees.
But this is well understood, and it’s clear that claiming MNCs “pay for” 50% of PAYE is shorthand for “50% of PAYE is accounted for by employees of MNCs”, or “MNCs account for 50% of PAYE”.
Unfortunately, while Revenue was able to estimate the percentage of corporation tax paid by MNCs in 2015, it somewhat surprisingly does not systematically track various tax takes from MNCs in Ireland.
Neither report mentioned above gives amounts or percentages of PAYE accounted for by MNCs specifically, and Revenue was unable to provide FactCheck that information.
However, the October 2014 report does state that: “large cases division companies account for 56% of PAYE”.
As we’ve already seen, large case division companies are not exclusively made up of foreign-owned MNCs, but as we have also seen, there is very significant overlap between the two groups in terms of corporation tax take.
So whatever PAYE is accounted for by LCDs, it is likely that the amount accounted for by MNCs is very similar.
However, we cannot make that assumption, and without proper figures from Revenue, the evidence available to us at this time only supports a verdict of UNPROVEN.
Claim: Multinationals account for 50% of VAT
Verdict: UNPROVEN
Once again, due to the lack of systematic MNC tracking by Revenue, we’re forced to resort to figures for LCDs, as a proxy for MNCs. Which is unfortunate.
The October 2014 report states that: “LCD cases account for…52% of VAT”.
Again, given the very high level of overlap between LCD companies and MNCs as regards corporation tax, it is likely that MNCs do pay around 50% of VAT, but we cannot make this assumption.
We rate the claim UNPROVEN.
Claim: Multinationals account for 92% of customs and excise
Verdict: UNPROVEN
Firstly, it’s important to note that when companies pay Revenue excise, they then almost always recoup all of those payments, by adding to the price of products like tobacco, alcohol and fuel.
This is roughly analogous to the point made above about PAYE. The cost of whatever excise is paid by MNCs is ultimately borne, more or less, by the customers of MNCs.
And secondly, customs and excise are two separate levies. It seems likely Suzanne Kelly was referring only to excise, since the evidence she cited only refers to excise, but our request for clarification on this point was not answered in time for publication.
In any event, according to the October 2014 report: “LCD cases account for…92% of Excise…”
Again, based on the overlap, it seems likely that MNCs would pay somewhere in this region of excise to Revenue, but without a specific measure from Revenue, we cannot make this assumption.
We also rate this claim UNPROVEN.
To read Revenue’s 2014 report on corporation tax, click here.
To read their 2016 report on corporation tax, click here.
Send your FactCheck requests to factcheck@thejournal.ie
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Over €350,000 per home! Could they not have done something different or in a different area for alot cheaper?
@The Bob: ffs…sell the prime city centre site..add the sale money to the 20 million and build out in the suburbs..would get much better value and more units.
@The Bob: The mates of FF/FG are carrying out the work. give them some respect ;^)
@The Bob: the scanger must always be kept as close to the city centre as possible…. Couldn’t have him on a bus or train like the people commuting from the Midlands every day, that would be simply abusive!
@The Bob: Have you seen the amount of site clearance that has o be done and the size of the complex itself. That will be a fair spend in itself.
After this place came into rack and ruin the courthouse in Kilmainham closed down, wonder would there be any connection at all, ahem.
Build, wreck, repeat. Grand when the ould clown of a taxpayer is footing the bill.
@mcgoo: exactly,it’s poor management. These should be let to people and inspected frequently and if any of the tenants let their property fall into disrepair they should be evicted( like what happens in the private market) and no other property should be offered to them.if this was properly managed word would get out that the council meant business and people might start respecting what is handed to them…….. and if each individual home is kept well, the whole place would follow suit.
So is the plan to knock the remaining four blocks and rehome the existing tenants in the new builds and in addition to build new social homes and private homes , although it will take some marketing to sell private homes in an estate with a history, it might be better to rename the whole development,
@Honeybee:
In the present crisis, they will sell the private ones alright but if trouble starts again (it would only take one or two families) the private owners will sell up, the only buyers will be there Council and eventually we will be back to square one.
@Honeybee: It’s bizzare, why would I want to buy a house in a development while my neighbour gets the exact same house for nothing? It just can’t see myself being a slave to a mortgage, getting up early to go to work and paying down 40 years of debt while my neighbour has all day parties every time the sun’s out. Go ask my bollox.
@Jayo Breathneach: id love one if they are free.
@Honeybee: Don’t worry they will get some sort of fancy name for the development like Lime Avenue or Madison Square
@Bingobango: So people in council houses do not work. Strange I know loads of people in council houses who work and damn hard.
Poor Leo decided to miss the photo opportunity….
@Keith Wizzy: He’s afraid the media would ask him about what he said in the “private” soiree in New York. Or he has the hump with them.
@wattsed: Was deffo the Trump incident that lost him this planned candid camera moment. Evidenced by his quick cozying up for the press update in his Dail Chitchat soundbite instead.
@wattsed: Anyway I’m going to stop bashing Leo for the rest of the day. I don’t want to be a gay perceived as homophobic. Though I would use a piece of the anatomy to describe him but deffo not in a gay way :)
@wattsed: His big mistake what he said would have been held inside the four walls of the room
His big mistake
357K a unit? Really?
@Ronan Sexton:
Anything built to council specs will cost way more.
The council put in a new bathroom for the parents in law, cost €6500. I did my parents, identical standard, less than €3000
Looks lovely, be sure to keep it to those standards.
Move all the uneployed out and give the houses to nurses and local teachers. Plenty of empthy houses in Letrim
@james foley: So by train of thought then, everybody who lives in a council house is unemployed! Moving unemployed people away from their community and friends and extended family, to a county with unemployment issues of its own is your solution.
Would culling them not be better and more cost effective?
@james foley:
Surprised you were not accused of ethnic cleansing.
More election photo shouts, It’s Paschal Donohoe electoral area after all. Such blatant use of public money by a minister for possible electrical gain. Nothing ever changes only the faces. Eoghan Murphy’s was elected just over the quays so its a double win for ministers, no wonder Leo cancelled his attendance. His guff in New York would have rained on this parade. Also I see the bald head of Councillor Ray McAdam stand behind Paschal, such bravery not wearing a cap. Risking cancer for a photo shoot.
Inchicore and Coolock never had a chance when such FG heavy weight owe there power to this area. Any chance some journalist could ask what mathematical equation was used to priories this redevelopment. FG have outplayed all other political parties taking credit for any good news.
“As the economy picked up during the Celtic Tiger, Dublin City Council pledged to regenerate the flats and again looked for help from a private developer. A plan was developed to tear down the flats and build more than 800 new units.” why are we now getting a quarter less units than the old plan, with the housing crisis worse than ever? The crisis cant be solved without addressing the extremely poor utilisation of land…
Horrendously poor management, policing and total disregard for where they live caused the place to fall into ruin in the first place. No problem with the idea of people needing homes to be provided for them but for christs sake I’d love to see some of these people gifted free homes take some actual pride in where they live and look after the place! Otherwise we’ll just be knocking the whole lot again in 20-30yrs!
600 units is a waste of space, the site is massive, at least 1000 units could comfortably fit on that site. Heights should be at least 10 floors.
have your say