As with any tax break, those who renewed it annually and those who benefited from it could make a case for the artists’ tax exemption, even as it hugely assisted a handful of super-rich artists, for bringing various ancillary benefits to the state – such as the prospect that you might meet Elvis Costello at a party or see Irvine Welsh in the supermarket. It certainly had the effect of encouraging artistic production in the country, if that can be counted as a benefit. ‘However,’ a journalist wrote, ‘the exemption for artistic income was costing the state tens of millions of euros in forgone tax.’62 Just thirty artists accounted for nearly 60 per cent of what was theoretically lost.63 It must be said that this was small beer compared to what was sacrificed for various non-artistic corporate tax breaks, and what was ‘forgone’ with the low rate of tax on corporate profits that had attracted so many multinational corporations to Ireland. Artists were a convenient scapegoat for Ireland’s tax-haven status, which in reality had little enough to do with the arts. But throughout the period of the Celtic Tiger, perhaps because in the celebrity magazines artists were so visible among Ireland’s conspicuously rich consumers, the artists’ tax exemption came under populist pressure. Bono’s name figured frequently in the discussion, its defenders forced to defend him, as in this newspaper report from a parliamentary committee hearing: ‘An artist like U2 lead singer Bono is “priceless” and, if he left, Ireland would lose an extraordinary economic advantage, David Kavanagh of the Irish Playwrights and Screenwriters Guild said.’64 A Green member of parliament defended the scheme, saying ‘personalities such as Bono [and others] may earn large amounts of money in a particular calendar year but perhaps not earn money in the previous year or the year after’.65 This parliamentarian displayed remarkably little understanding of how U2’s financial affairs might be organised: the last year in which Bono failed to ‘earn money’, and plenty of it, was in the 1970s. On letters pages and radio phone-ins, Bono was the national poster-boy for undeserving tax-exempt artists.
Thus it was that, in 2006, the Irish government capped the exemption for any given individual at €250,000 annually – a threshold that would be a distant dream for the vast majority of writers, painters and musicians, but one that was of immediate concern to U2. (The cap would later be cut still further.) The group responded quickly by relocating U2’s music-publishing arm to Amsterdam, where its royalties would be taxed at just 5 per cent, an arrangement the Rolling Stones had been enjoying for years. The news of U2’s new Dutch location emerged in August of that year to some general outrage in the media and among the public at large, mindful especially of Bono’s whiter-than-white image.
The band initially said nothing in public. The local grapevine suggested that if the move to the Netherlands both saved money and caused public embarrassment to Bono because of his apparent hypocrisy after all his calls for government spending on the Third World’s poor, it would be counted as a win–win proposition by other members of the band. This glee at the reeling-in of Bono’s ego would be enjoyed most, we heard, by drummer Larry Mullen Jr, who was annoyed at Bono’s ‘humanitarian’ globe-trotting, particularly the photo-ops with the despised George W. Bush and Tony Blair (see Chapters 2 and 3). But those were mere rumours.
Commentators picked up the public mood and entered the vacuum left by the band’s silence, with the most savage criticism directed at U2 in Ireland since at least the 1980s. Under the headline, ‘When the Band Has No Shame’, the by-no-means-leftist Hugh Linehan of the Irish Times recalled Leona Helmsley’s famous dictum that ‘only the little people pay taxes’, and continued by attacking U2:
When a special guest showed up for one of the band’s Croke Park concerts last year, the singer welcomed him from the stage. ‘I am aware An Taoiseach [prime minster] Bertie Ahern is in the crowd here tonight,’ he announced. ‘He has promised to give 0.7 per cent of our GDP to Africa and I urge him not to break that promise.’ He added understandingly that: ‘I know it’s hard to build a hospital in Abuja, Nigeria, when you need to build hospitals here.’ The crowd booed bad, mean Bertie and cheered the sainted Bono. Would the little people do the same today?
Even if you’ve never had much time for U2’s particular brand of bombastic stadium rock, you have to respect Bono for the amount of sheer energy he has expended on the Make Poverty History campaign. Remarkably, he has managed for most of the time to be pretty self-deprecating about it – no easy trick. As critics of the campaign have pointed out, it’s a bit, well, rich to be lecturing middle-income taxpayers about their government’s responsibilities, while you’re jetting around the world from one glamorous pad to another, meanwhile getting a third of your income tax-free. But if a key focus of your campaign is to raise the Irish Government’s level of overseas aid to 0.7 per cent of GNP, then it doesn’t look good if, after more than 20 years of tax-freeloading, you jump ship to avoid paying what many would see as your fair share.66
The Irish-born comedian Graham Norton, a popular presenter on British TV, joined the chorus of criticism: ‘People like Bono really annoy me. He goes to hell and back to avoid paying tax. He has a special accountant. He works out Irish tax loopholes. And then he’s asking me to buy a well for an African village. Tarmac a road or pay for a school, you tight-wad!’67
Even a top Irish concert promoter who had previously worked with the band, Jim Aiken, metaphorically burned any remaining boats he might have hoped to berth in U2’s harbour by stating publicly that ‘U2 are arch-capitalists – arch-capitalists – but it looks as though they’re not.’ He added: ‘I believe the ultimate charity donation is to pay your taxes in the country where you live.’68
U2, of course, continued to pay many taxes in Ireland, a country that conveniently continued to have some of the lowest personal and corporate tax rates in Europe. But, however unfairly, no longer would most people believe that their status as Irish tax-residents arose from anything more patriotic than the bottom line. U2’s complex multiple businesses were just doing their own version of the corporate tax-avoidance manoeuvre described memorably in the New York Times, when reporting how a company such as Google uses it, as ‘Double Irish with a Dutch sandwich’.69
Even a reliably establishment journalist such as Matt Cooper could write: ‘Critics of U2 pointed out that the band and its members had been able to increase their wealth dramatically over the previous two decades by reinvesting the tax-free profits they had accrued in such a favourable environment. Having made such a fortune already, how much more did they need?’70 Activists pointed out that, globally, the use of offshore tax havens by rich individuals had a huge cost in terms of lost taxation to governments in the developed and developing worlds.
However, all this criticism was somewhat dulled by Ireland’s general air of prosperity. In 2006 the Irish exchequer was awash in funds gained from taxing a still-booming economy, and what we were soon to learn was a dangerously bubbling property market. The outrage about U2’s tax move was tempered by a sense of satisfaction with the government, not least for the fact that it had forced Bono and the boys into its Dutch move by capping the inequitable artists’ tax exemption to ensure its benefits were enjoyed most by those who needed them most.
Bono was nonetheless sufficiently riled by the criticism that he eventually responded to it, while in Cork in 2007 to receive an honorary degree. ‘Our tax has always been not just to the letter of the law but to the spirit of the law’, he said. ‘This country’s prosperity came out of tax innovation so it would be sort of churlish to criticise U2 for what we were encouraged to do and what brought all of these companies in the first place.’71
Bono had no choice but to drawl a defence that cast U2 as just another corporate entity doing what corporate entities do. U2, we were forced to conclude, was a company like any other. But if this was a little painful for him, at least in 2007 when he said it there was still an honest, if somewhat blinkered, case to be made that ‘tax innovation’ had indeed been broadly beneficial to the Irish economy, leading to initiatives such as the Irish Financial Services Centre, where more than a quarter of the world’s hedge funds had offices. It wouldn’t be long before that case began to unravel horribly.