Last April the International Monetary Fund (IMF) published gross domestic product (GDP) data for countries across the globe, in current US dollars.
The Irish level adjusted by me for overseas multinational data in the National Accounts was at $26,600 (€25,300) in 2022 with Lithuania and Portugal just behind and Estonia and Czech Republic ahead.
If the polluted Modified GNI* metric was used the GDP per capita would be €53,600.
Irish public debt rose more than 11% to €226bn at the end of 2022. The Department of Finance announced in March 2023 that the per capita debt was at €44,000. It said, "Ireland has one the highest per capita debt burdens in the world."
Last February The Financial Times ran a story titled "Irish central banker defends runaway economic growth as ‘real.’"
Sept 2023: Irish wealthiest in the World in 2023! Brits ahead in GDP per capita
However, the governor was economical with the truth.
Gabriel Makhlouf told the Financial Times that much of Ireland’s growth — forecast to be 12.2% last year, more than treble growth in the overall EU — comes from “real factories with real people” even if a lot of activity stems from big technology and pharmaceutical groups.
“Too many people think or jump to the conclusion that this is all about intellectual property that’s sort of moving around and it’s not real, and that’s wrong,” Makhlouf said.
In late 2021 economists at the Central Bank of Ireland noted: "Further increases in exports due to contract manufacturing and merchanting will continue to distort Ireland’s trade performance and inflate GDP in the National Accounts."
Ireland is not among the wealthy countries.
Last June Eurostat reported that actual individual consumption (AIC) consists of goods and services actually consumed by households, irrespective of whether they were purchased and paid for by households directly, by government, or by nonprofit organizations. It said the AIC per capita is an indicator of the material welfare of households.
Ireland in 2022 fell to 87, meaning AIC was 13% below the EU average and a gap of 32% with Germany.
Ireland was at 115% in 2006-7!
Patrick Honohan, a former governor of the Central Bank and emeritus professor of economics at Trinity College, Dublin, has written a piece "Is Ireland really the most prosperous country in Europe?"
Ireland’s average per capita consumption ranked 21 in the world in 2017 (ignoring countries with less than a million population).
The OECD club of mainly advanced economies, ranked Ireland 19 of 38 countries for household net adjusted disposable income.
The 2022 edition of the European Commission's Scoreboard of 2,500 business companies, outlines spending on R&D (research and development) worldwide in 2021.
Ireland has 24 companies on the global listing led by Medtronic of the US having a spend of €2.4bn (the redomiciled firms are mainly American). However, the only Irish-born companies are Kerry Group and both Bank of Ireland and Allied Irish Banks.
Irish SMEs (small and medium-sized firms) also export less than their European counterparts. Survey data shows the percentage of SMEs that do not export fluctuated between 58% and 65% over the past 5 years – well above the Euro Area (single currency area) average. In 2022 Irish companies exported to the other 19 other member countries, were at a paltry €8.9bn. The Euro Area has a population of 347mn including Ireland's 5.057mn.
Return of Leprechaun economics
In July 2016 Paul Krugman, the economics columnist for The New York Times, wrote in a tweet when he saw that Ireland's Central Statistics Office (CSO) had upgraded 2015 economic growth to a stunning level "Leprechaun economics: Ireland reports 26% growth!"
Following the exceptional growth rate recorded in 2015, as well as the growing disconnect between GDP/GNI and actual income levels, the CSO developed an alternative measure of Irish economic activity.
The Central Statistics Office (CSO) produced a modified gross national income or GNI* in 2017.
It excluded:retained earnings of firms that have re-domiciled their HQ to Ireland (for tax reductions purposes);the depreciation of intellectual property assets located in Ireland and R&D service imports; and,
the depreciation of aircraft owned by aircraft-leasing companies.
However the GNI* was stillborn as the Irish Government wanted to facilitate Apple's fake (virtual) contract manufacturing (goods for processing). Apple chief Tim Cook had said that the firm was the biggest taxpayer in Ireland.
In 2018 it was reported that Ireland’s gross domestic product (GDP) rose by 7.8% in 2017. According to the IMF’s ‘World Economic Outlook,’ fake exports from Ireland to China of Apple’s smartphones accounted for about a quarter of that increase. However, the International Monetary Fund said that the income generated from iPhone sales “does not fully contribute to the Irish economy.”
The Department of Finance noted "GDP, for instance, has overstated the income of those living in Ireland since the 1980s. This is a result of the significant multinational footprint in Ireland, which has grown as the pace of globalisation accelerated and Ireland became more embedded in global supply chains. An important consequence of this is that a significant part of the income arising from the production of goods and services in Ireland – or in the case of ‘contract manufacturing’ outside of Ireland – accrues to the foreign owners of these firms. Hence, the GDP aggregate overstates the living standards of Irish residents...This was driven by inter alia a massive rebound in ‘contract manufacturing’. While this activity inflates Ireland’s exports, it has almost no impact on Irish living standards as it generates little or no domestic activity/employment."
There is additional Corporation Tax for the Exchequer (see below).
Modified GNI* is now redundant. It jumped 17% in current terms in 2022.
The net value of virtual "contract manufacturing /goods for processing" and overseas merchanting has more than doubled in recent years. Apple for example has the fiction that Ireland sells its merchandise to China as some intellectual property has been allocated to Ireland.
The net additional value of the virtual activity of Apple and big pharmaceutical firms was at €143bn in 2022 and it was added to the Irish National Accounts.
Of course, the Irish Government through the Department of Finance knew that the GNI* would become a joke.
Irish-born companies' value of merchandise/ services exports in 2022 was €32bn.
A sample of GDP per capita in 2022
IMF: Luxembourg 127.58 thousand (exaggerated: about 47% of the workforce of 510,00 live in neighbouring countries); United States 76.35 thousand; Norway 106.33 thousand; Ireland 103.18 thousand X*; Switzerland 92.37 thousand; Qatar 84.42 thousand; Singapore 82.81 thousand;
Denmark 66.52 thousand; Australia 65.53 thousand; Netherlands 56.49 thousand; Sweden 55.69 thousand; Canada 55.09 thousand; Austria 52.26 thousand; Finland 50.66 thousand; Belgium 50.11 thousand; Germany 48.64 thousand; New Zealand 47.21 thousand; United Kingdom 45.29 thousand; France 42.41 thousand; France 42.41 thousand;
Italy 34.11 thousand; Japan 33.82 thousand; Taiwan (Province of China) 32.64 thousand; South Korea 32.25 thousand; Saudi Arabia 31.85 thousand;
Spain 29.42 thousand; Estonia 28.63 thousand; Czech Republic 27.61 thousand; Lithuania 25.04 thousand; Portugal 24.52 thousand; Latvia 22.35 thousand; Greece 20.62 thousand.
China, People's Republic of 12.81 thousand; Russian Federation 15.44 thousand.
*The Irish level here is before adjustments and is usually used by overseas people who do not understand the Irish distortions.
An example of a regular distortion internationally was in June 2023 when Denmark, Ireland and Switzerland were named the top three among 64 economies measured for their global competitiveness in the 2023 IMD World Competitiveness Ranking.
"Ireland made a remarkable leap from 11th to take second place."
Of course, the GDP was the headline one while the Irish Partner Institute was IDA Ireland, the state's foreign direct investment agency.
Simon Coveney, minister for Enterprise, Trade and Employment, crowed about the strong Irish ranking in the 2023 IMD World Competitive Rankings. It didn't matter that it was bullshit!
For example, the UN's Human Development Index for 2001/2022 has an 8th ranking for Ireland among 191 countries. However, there are 4 main criteria and the Gross National Income category has Ireland at $76,000 per capita.
Corporation tax bonanza
This year the Irish Fiscal Council published a paper on the corporation tax payments made by mainly American multinationals. In 2022 Ireland raised €22.6bn in corporation tax, 182% more than the €8bn it took just five years ago.
In 2022, just ten corporate groups accounted for three-fifths of all corporation tax receipts. While just three groups accounted for around a third of all corporation tax revenues in 2021.
These American firms led by Apple, pay more than a quarter of all taxes in Ireland and the Fiscal Council is worried that the Leprechaun's crock of gold under the rainbow will not always be full.
In 2023, corporation tax revenues are projected to increase by a further 7% year-on-year and reach €24.3bn by year-end (Department of Finance).
In effect, Ireland is again facilitating massive international tax avoidance by mainly American multinationals.
Apple reported this year that profits at its main Irish subsidiary rose to $69.3bn (€63.5bn) in 2022. The tax charge was $11.08bn but it's not clear how much was paid in Ireland.
The fake contract manufacturing (goods for processing) and overseas merchanting which had a net value of €143bn in 2022, were called 'exports' in Irish National Accounts. That was after a small charge of €9bn called 'imports.'
The net value of this virtual trade more than doubled between 2017 and 2022. This is why the corporation tax has jumped.
It's obvious in plain sight that international tax avoidance is in play.
