Irish Economy
Bono struggling again as anti-poverty campaigner and tax avoider
By Michael Hennigan, Finfacts founder and editor
Oct 30, 2014 - 8:21 AM

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Bono, the frontman for U2 the Irish rock group, has again revealed his struggle to reconcile his role as a anti-poverty campaigner with his use of international loopholes to avoid paying income tax in Ireland.

The new issue of Hot Press, the Dublin music magazine, says: "Olaf Tyaransen joins Bono, Edge, Larry and Adam on a two-hour flight, discussing the new album, the iTunes experiment, and everything else concerning the band on everyone’s lips. He finds the four in rare form, eager to discuss a record that many have ranked amongst the best of their long and decorated career."

“It absolutely represents where we are,” says Adam Clayton of the album, “As a band that’s been around a long time. I’m always a little bit of looking back and trying to rationalize where you came from, but I think, in certain ways, it revitalised some of the things that made us.”

U2 was benefiting from an Irish tax exemption on most of its global earnings thanks to the Artists' Exemption Scheme that was introduced in 1969 to exempt poor artists from income tax.

The Revenue had to decide if a work was of artistic merit and by 2005, the scheme was effectively a racket with rulings on 'artistic merit' that would even embarrass the judges of the UK's Turner Prize.

Before the scheme was finally scrapped, the Revenue judged that the memoir of Bertie Ahern, former taoiseach, merited an exemption.

In the December 2005 Budget, an annual ceiling of €250,000 was put on the exemption and in August 2006, U2 became tax-resident in the Netherlands, using the mailbox system that the Rolling Stones had taken advantage of.

U2 legally avoided paying income tax on most of the groups income in Ireland until 2005 and it legally avoided paying no tax on most of its income since 2006.

Bono in the Hot Press interview appeared to have been eager to get across the message that while paying no tax, the group was working hard for their embattled compatriots during the recession.

He felt the pain of a "very unjust situation that the public bailed out private sector wrongdoing.”

According to the Irish Times today, Bono claims that U2 was helping IDA Ireland, the inward investment agency, to attract foreign firms to Ireland during the recession.

The singer said the band had worked to bring foreign direct investment to Ireland as a way of repaying the country that has “been so good to us and that we love”.

“We felt what we could be useful with was trying to get more companies to come to Ireland. So we went to work for the IDA. And I do, and I still do.”

Over the years a  lot of people have helped but they wouldn't qualify for tax exemptions.

The move to the Netherlands in 2006 was a matter of principle as tax competitiveness was Irish policy and "The real hypocrisy is saying ‘it’s fine for the country, but it’s not fine for U2 to think like that'," Bono said.

What is interesting about this self-serving yarn is that the Irish Revenue operated a 'Dr Jekyll and Mr Hyde' system with a blind eye turned to the questionable schemes of foreign companies to avoid corporate tax while on personal tax evasion, the authorities publicly named and shamed individuals who used offshore tax havens, imposed  punitive penalties on them and hauled some of them before the courts.

Bono aka Paul Hewson with his colleagues, were already very rich in 2006 and they could afford to pay expensive lawyers and accountants to help them minimise global personal taxes.

That's how the system works towards the top of the economic pyramid.

The Dutch government has acknowledged that some of its tax treaties with developing countries are unfair and last November it published a report highlighting how multinational companies can use its tax avoidance vehicles such as the one that benefits U2 to move profits tax-free from poor countries:

In developing countries without large government income from oil or diamonds, tax revenues have increased over the past decade, but remain much lower than in high income countries. Revenues are on average around 20% of GDP in middle income countries and 15% in low income countries...

Corporate taxes are an important revenue component for low and middle income countries, typically generating 10-30% of total tax revenues. The importance of corporate tax revenues for developing countries implies that potential threats to these revenues, such as tax avoidance by multinationals, are highly relevant in the context of financing for development."

Bono suggests Irish critics of U2's move to the Netherlands are hypocrites but he must know that his credibility as an anti-poverty campaigner is seriously compromised.

Thanks for the pro bono work for IDA Ireland; you're among the wealthiest in the country and you've had tremendous success. However, it shouldn't be the right of rich people to let ordinary folk to pick up the tab for such agencies.

Finfacts 2013: Bono's hypocrisy on Africa, corporate tax avoidance in Ireland

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