Corporation Tax powers finally set to be devolved?

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The Belfast Telegraph has a number of articles about the devolution of control over Corporation Tax: with a timeline here.

From the Belfast Telegraph:

Finance Minister Simon Hamilton said: “I am optimistic that we will get a positive answer from the Prime Minister.
“I think that the Government wants to do this and we have made a very robust case to them.”
A senior Tory source concurred with this assessment. However, the cost of cutting the tax is likely to be more than £200m a year.

Liam Clarke suggests the decision is linked to the fact that if Scotland remains within the union they will also be given additional tax varying powers.

The ability to reduce corporation tax is not, however, free. Sammy Wilson during his time as finance minister was more cautious than many. He estimated the loss of revenue at £40 million for every percentage point reduction. As Clarke notes:

Nobody is saying it out loud but the best way to do that might involve more taxes. Water charges, which apply in both the UK and the Republic, could free up £400m a year.
That would look like taxing households to subsidise big business. Whether we did that or cut services, pushing through the change would require a degree or political vision and discipline that is not evident at present.

The Belfast Telegraph also notes the rates of corporation tax internationally. It should be noted that a number of large manufacturing economies with proportionally much larger business and industrial sectors have significantly higher rates of the tax.

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  • Michael Henry

    Reporters are still obsessed with telling others how to do their jobs-

    The Belfast Telegraph done itself proud today-Tax the people more and get ordinary Joe and Jill to cough up a extra 400 million they say-what a solution they say-

    Of course the media would be the first to complain if extra water charges were to come in and some Politicians would be red carded-( and rightly so )-not a word in this report about the millions being taken out of the budget by English fines- you would think that it would be a factor in any discussions about Corporation Tax-we need to fix the system at the Assembly and get rid of the fines and getting the fines already paid back again -then we can have a shot at the future-

  • Superfluous

    I’ve been paying tax to other states for 9 years now, because there just isn’t the work for me in Northern Ireland. The people may have to shore up the hole in the tax receipts to get companies in, but once the companies are in there will be higher wages to tax – and we can stop the brain drain that caused me and half of my friends to leave.

  • Newton Emerson

    Nurse! Nurse!

  • Michael Henry

    You have got those white uniforms in the head Kid-

  • Comrade Stalin

    Consistently requires that Sinn Féin oppose anything that cuts the block grant coming into NI.

  • Zeno1

    Reducing Corporation Tax is seen as a magic bullet. But how far do we have to cut it to actually bring in jobs and investment. It is impossible for us to match Ireland in that race to the bottom. Most of the big corporates in Ireland pay next to nothing in CT.

    http://www.ft.com/cms/s/0/46e44b6c-c203-11e2-ab66-00144feab7de.html

    http://www.forbes.com/sites/taxanalysts/2013/11/06/if-ireland-is-not-a-tax-haven-what-is-it/

    The people campaigning for CT cuts are those that will benefit and those people are the already rich local businessmen.
    A very rough example………..
    A Local Company making 400k a year would pay around 22% or 88k in Corporation Tax. If we cut that to 12% to be half a point lower than Ireland their Tax bill drops by £40,000. Will they invest that and create jobs? Or stick it in their pocket.?

    Think about that. They would have £312,000 in profit after paying CT. Why should we give the another 40k?

  • Mister_Joe

    Worldwide, Corporations are now paying their lowest share of the total tax burden than they ever have, including here in Canada. It’s time to stop laying the (justifiable) tax burden on the middle class. I don’t mind in the least having a progressive tax system; I have mostly been a high earner and I think it is fair. But Corporations getting away with not sharing their profits fairly makes me want to throw up.

  • Superfluous

    Because we’d make a lot more money taxing the 40% of all the 44k+ wages they pay?

  • Zeno1

    They are not going to be encouraged to create many 44k jobs if they are only 40k better off themselves. I think you have misunderstood the question?

  • Reader

    They will invest the money, obviously. Companies in the corporation tax bracket need to grow or die.
    If they just wanted to pocket another 40,000 they could just jack up their prices a bit. (Spot the flaw in that cunning plan…)

  • SeaanUiNeill

    I’d always hoped that “we ourselves” would not need to sit holding out a begging bowl to our enemies. But I suppose if you see the “block grant” dole as some kind of a “war reparation”……..

  • SeaanUiNeill

    Bribing companies to come to northern Ireland has been going on for most of my life, and we’re still relying, directly or indirectly, on the Block Grant to cover about 70% of our employment costs.

    Has anyone, anywhere, ever thought of anything as radical as trying to develop a real ecomomy locally which is not simply based on a few underfunded crack pot service ideas that people loose their houses funding?

  • Superfluous

    How would one develop a real economy? I’m from Belfast, but I won’t live there or base a business there because it’s cheaper to do business elsewhere. If someone from Belfast doesn’t find the place attractive who will?

    There’s a marketplace of states, and NI isn’t very competitive in the marketplace, the only thing going for it is cheap staff (and half the good staff have emigrated) – you can say it shouldn’t be about price, but very often it is – ask Tesco why they are losing market share to Aldi and LIDL and what they are doing about it? They don’t complain that the cheap tastes of their customers isn’t fair, they compete on price.

  • Superfluous

    Profit is after costs (such as wages) – if you want good staff in a competitive environment you have to pay decent wages. Most high tech jobs now depend on highly qualified people (the average Google salary is $120k – average!) Companies will be lured to NI by competitive tax, once there they need to find staff – as more companies come the market for staff becomes more competitive and wages increase.

  • Zeno1

    I’m pretty sure the FT and Forbes links I provided shows we can not compete with Ireland when it comes to cutting Tax. I have also given an example of how a local business would benefit to the tune of around 40k. My point is they are already here and already making big profits. I think you have gone off on a tangent.

  • Zeno1

    There is no reason you can’t do it or at least explain how it could be done.
    Our biggest expenditure is on Health and Education. The Block Grant allows us a free Health Service and free education up to 18 years old. It pays for Doctors Nurses and Teachers among other things.
    Personally I would abolish Corporation Tax completely and increases wages and income tax to rates where the workforce is better off. That way they wouldn’t need to find ways of avoiding CT and the government could collect income tax from 30 million individuals who find it a lot harder to dodge tax.
    Obviously the Corporates wouldn’t like that at all, but if all countries did it ,they would have no choice.

  • Zeno1

    “They will invest the money, obviously.”

    I don’t see that as being obvious at all. But the truth is no one knows what the business above might do with the extra 40k. They might just invest it in Directors Pensions or spend it on Foreign holidays. It’s not as we we are saying to them, “Here’s another 40k but you have to create 2 jobs with it.” We are taking 40k out of our budget and giving it to rich companies that are already in business here and saying “do what you want with it.” The Tax payer is in effect subsidising the wealthy, yet again.

  • Superfluous

    My point is there are not enough companies in NI and it’s very difficult to attract more under the current system.

  • Zeno1

    Fair enough, my point is cutting corporation tax is not going to encourage more companies to come here when they can set up less than 50 miles away and pay next to nothing.

    There are jobs here for well qualified graduates. My Son was offered two jobs this week and turned them down because the salary being offered was a joke.

  • Superfluous

    I’ve a bit of uncertainty in my current role and I’ve kept an eye on the job market back in NI – in my industry (IT programming) the jobs in Dublin pay nearly twice what they do in Belfast. Although there do seem to be plenty of jobs in Belfast, just with low wages, as you say.

  • Zeno1

    The job shortage is really concentrated on the lower skilled. 11,000 applied to work in a Supermarket a few years ago and nothing much has changed. The problem for Graduates etc is salaries. Odd as it may seem, if we had more supermarkets and call centres we could cut the 60,000 unemployed in half.

  • Thomas Girvan

    If I were you I would not be applying for a job as an economist.
    By the way,the full stop is second from the left from M on your keyboard.

  • Michael Henry

    I am not applying for any job as a economist- I am just giving my point of view-it’s a pity that the Tory’s / DUP / Fine Gael got a hold of our economy’s -but the electorate can keep them or get rid of them-

    I will write the English language any way I see fit- you do the same-it does not belong to either of us-

  • Thomas Girvan

    I thought it was the Queen’s English!

  • Michael Henry

    If the Queen complains about my writing I will tell her where to go also- she is red blooded like the rest of us-

  • Mister_Joe

    Tut tut.

  • barnshee

    “-we need to fix the system at the Assembly and get rid of the fines and getting the fines already paid back again -then we can have a shot at the future-”

    You are not being fined -you cannot generate enough tax to pay for your services -the amount of subsidy you get is being reduced -like it or lump it.

    PS If you try your traditional methods of

    1 Whining about repression and /or
    2 Blowing up people and property
    We will reduce the subsidy even more to cover any costs —when the arse is finally out of you trousers common sense may prevail.

  • Kevin Breslin

    If corporations aren’t willing to pay for their own roads, security, refuge collection, research base, employer healthcare etc. that come from the public purse then no corporation tax is a massive free lunch to give out. We have massive skill shortages because we rely on students to fund training for momentary skills deficits companies need out of their own pocket entirely, with little thought given to integration or understanding these skills.

  • Zeno1

    I was only suggesting that as a mechanism to prevent them avoiding paying CT. If the government didn’t educate and provide healthcare for people, not to mention the infrastructure etc. There would be no corporations.

  • Kevin Breslin

    That is true, the only real businesses left if they were to be left without state investment would be pre-mercantile traders and pseudo communist oligarchical corporatist states that are effectively states themselves.