Lack of reaction on home turf to U2’s ‘tax planning’ certainly speaks volumes

ANY SERIOUS attempt to engage in the debate over U2’s approach to taxation inevitably leaves you trapped in a morass of double standards comparable only to the famous Glastonbury mud.

There is of course something profoundly hypocritical about Bono lecturing his fans on various moral issues, including Third-World debt, while U2 appears – from a taxation perspective – to be a fully signed up member of what Rik Mayall's character in The Young Ones– the would-be anarchist Rick – called the fascist breadhead conspiracy.

As a result the band finds itself an easy – and to an extent deserving – target for any pressure group looking to highlight a cause. The latest, Art Uncut, seems to fall into this category given its real focus seems to be opposing the spending cuts planned by David Cameron’s coalition government.

The group, like others before it, has focused on a company called U2 Ltd, which is central to the structure by which the band manages royalty payments. When Ireland brought in a cap on the artists income tax exemption scheme of €250,000 in 2006, the company moved its domicile to the Netherlands.

The band’s explanation is that, in the words of U2 manager Paul McGuinness, they are a global business and pay tax globally. In a 2009 interview he said 95 per cent of U2’s business takes place outside of Ireland and as a result “the band pays many different kinds of taxes all over the world”.

The band are “personal investors and employers” in Ireland, he said, but “like any other business, U2 operates in a tax-efficient manner”.

The language and tone of McGuinness’s comments will ring a bell with anyone who has ever heard a multinational corporation such as Google or Microsoft justify its use of Ireland as part of its global tax planning.

While this does not take away from the divergence between U2’s words and their deeds, it should soften the cough of any Irish person who is minded to give them a hard time over it.

The reason outrage should be held in check is of course the fetishisation of the Irish 12.5 per cent corporation tax rate by both the current Government and its predecessor.

The retention of the rate was presented as some sort of victory when a bailout was sought and given by the EU and the IMF last December.

The corporation tax rate is seen as the flagship of a fleet of multinational-friendly tax policies and other measures put together over the last few decades. They underpin a very successful track record of attracting foreign direct investment and many of the firms attracted to Ireland as a result are seen as vital to the notion of an export-led recovery that can stave off a debt default.

It was not entirely clear if the rate was really up for grabs last December, but it certainly is in the mix now, with any reduction in the interest rate being charged on the bailout funds being linked by the French to some sort of concession on corporation tax.

Again, it is not entirely clear just exactly what the French want and why, but for the time being the Government is in “no surrender” mode, with the corporation tax rate being held as if it was the last bastion of Irish sovereignty.

Some would argue that a little less hyperbole might have seen the matter diffused.

The public, however, seem happy enough to go along with the Government narrative in which they have taken the tough and statesman-like decision to forgo a cut in the bailout rate to protect the corporation tax rate. Alternative explanations as to why there is no reduction – such as the failure of other European states to understand or accept the depth of the crisis in the euro zone – are too complex for everyday politics.

This is something of an aside from the main point, which is that the next time you feel some righteous indignation building inside you about Bono and his mates’ tax planning, you should remember that we are apparently locked in some existential battle with our euro zone partners to preserve the ability of Google, Microsoft and other massive corporations to do the same.

It would be pleasing to think the reason U2’s taxes are not really such a big deal here is that we are sophisticated lot who can see the inherent contradiction in criticising them while holding ourselves out as the destination of choice for tax-conscious multinationals.

But it’s more likely that we just don’t care, which says something else entirely.