Friday, March 30, 2007
“no prospect at all of a differential corporation tax in Northern Ireland”
There may have been an announcement of a review of the different tax rates between Northern Ireland and the Republic of Ireland, to be conducted by Sir David Varney a former chairman of HM Revenue and Customs - it was one element of that total package announced by Gordon Brown - but as the Belfast Telegraph’s Mark Hookhan reports, according to the Secretary of State for Wales, etc, corporation tax will not be affected.
Speaking yesterday in Westminster, Mr Hain said: “The problem here is, as the Chancellor and I have explained to the parties, European Union law makes it impossible to have differential corporation tax within any part of a nation state. So, there is no prospect at all of a differential corporation tax in Northern Ireland.”
Pete Baker @ 10:51 AM
Dan
The point is from the perspective of voters on the other side of the water why is it a good idea for them.
The argument is that we need to have a serious look at inherent structural weaknesses that make trading and setting up business in NI unattractive as compared to RoI . The advantage to the UK is twofold;
1 Improvements in the economy here benefits the UK.
2 What works here may work in other regions.As I said in another post if East Anglia were a separate country with the tax regime of the RoI you would see a totally different attitude to this in Westminster.
With regards Corporation tax I am not so sure it is the be all and end all cure for all woes. There are other matters that I would put ahead of that such as being in the Euro zone (even joint currency here in NI) or creating low tax port zones in the harbours and around airports. I would prefer to try to set up a framework that encouraged local business growth to balance any inward investment. It needs serious and detailed coordinated consideration and involves transport, training, energy costs etc.
Certainly the last budget shows us that New Labour care little about small business anyway so no; no one expects much but remember in the global economy if those with money to invest don’t like it they move.
Another problem in the UK is over centralisation. A lot of the power currently residing in Westminster really should be exercised in the regions.
As for the economy of RoI it may not be as strong as everyone thinks, very high levels of debt secured on property could start to look problematic if the drop in property prices really starts to take hold.
Posted by on Mar 31, 2007 @ 09:29 PMI see two of Britain’s leading pro-unionist columnists are coming around to the idea of a united Ireland
Jenny McCarthy in the Sunday Telegraph today
At that point, the least humiliating strategy may indeed be a voluntary entry into a United Ireland, in which Unionists could be a significant political force in alliance with genuine democrats, instead of a despised and disenfranchised minority within a crumbling United Kingdom.
Simon Heffer in The Times on Saturday
“I am in no doubt, now, what the only way forward is for Northern Ireland, and this has probably been the secret plan all along: incorporation into the Irish Republic, where it would at least be ruled by a reasonably successful government not composed almost entirely of nutters.”
Posted by on Apr 01, 2007 @ 08:12 AMCrategus,
Now a discussion around the inherant structural weakness of the Northern Ireland economy is worth having.
But it has to happen with an understanding of the reality of Westminster politics.http://www.timesonline.co.uk/tol/newspapers/sunday_times/ireland/article786274.ece
Is an old article but still has a lot of relavance, with public spending being restricted in comparison to recent years Westminster of either party will be looking for places to cut spending were nobody notices or cares, with no Labour or Tory MP’s under either Brown or Cameron Northern Ireland qualifies.
One of the tough questions is public sector pay, part of the reason small business is squeezed in NI is with the larger % of employment from the public sector makes it more difficult to employ. In most cases public sector pay is based on a UK national rate, the Treasury wants to move to regional pay rates so Nurses or or Teachers would be paid less in Belfast or Newcastle, as part of weaning NI off subsidies it may be part of the soloution but I can just imajine the screams of anger from the voters.
In terms of the Euro, I can never see Westminster agreement of NI going in to the Euro but not the rest of the UK, so NI politicians need to get to a consensus that UK should join, then start trying to change public opinion in England, realistically the first opportunity is probably Prime Minister Milliband in 2013 or 2017, as neither Brown nor Cameron are in favour.
Low Tax port zones around ports or airports is deliverable, it has been done with variable sucess in different parts of the UK since the 1980’s.
Your point re decisions being made in the regions is a good one and would totally agree, but it means decisions have to have consequences. i.e. no Water rates means higher something else tax or less spending on something else not begging for more from Uncle Gordon.
The point overall is the political establishment seem to beleive there is something called the Peace Dividend and they should get it to spend in Northern Ireland.
The population of the rest of these Isles assume Northern Ireland was seeing artificially high levels of public expenditure either because of the conflict or because difficult decisions were postponed during the conflict. The reason in now over and the money available should be spent on nurses, teachers, roads and trains in London, Birmingham and Newcastle.
Posted by on Apr 01, 2007 @ 09:05 AMI would assume that the loss of Corporation Tax in NI would not be substantial as most companies in NI have historically paid only 19% and through the use of allowances even the larger compaies have mitigated their taxes.
I don’t know if the figures are broken down in this way or if in fact GB companies with a tax take here such as M&S;Tesco, Sainsbury, and ASDA and all the other High Street stores are partially attributed to the NI economy.
I do know that there was a grant to equalise the tax in the 80’s e.g. if a company was able to forecast its profits over a period it could claim a grant to claw back the differential in corporation taxes North and South. Maybe the new allocation of money for Industrial Development could be used in this way for say 10 years.
I hope the New NI Government can do something to reduce CT here as we need a low tax economy to get away from the years of terrorism and mismanagement by a succession of Westminster incumbents at the NIO.
Posted by on Apr 01, 2007 @ 11:01 AMDan
What the people of SE GB need to realise is that the Treasury doesnt see plugging the outer regions of the UK with cash subsidy as some major act of generosity.
It is to maintain the overall fiscal balance of the UK.
Gordon Brown knows that 28% (just about)Corporation Tax is an acceptable level for the major Corporates based in the UK who contribute the biggest take - Banks, Insurance Companies, Petro Chemicals etc.
The regions are sadled with a CT Rate that suits the overall UK and if we were given the ability to lower our rate whilst maintaining UK Company law etc you would see more than just FDI flooding into NI.
Not to mention the fact that the call for such a lower rate would be echoed in Scotland, Wales and everywhere north of Birmingham.Basically the entire apple cart would be upset.
NI and the other regions need to play to their strengths but in the Treasury’s desire to extract the maximum overall take from UK plc it is going to lead to regional losers who will be supported by subsidy transfers.
Anyhow lets get real - there is nothing intrinsically better in the work ethic etc of the UK citisens who live around London.
It is all about geography and the London Financial centre.Perhaps we should empty all the regions and move to London ?
I get fed up with people who live in the South East saying the rest of us are spongers as if they work harder than the rest of us.
I have done business with many and we “wouldnt see them in our way” as we say here.Just because your postal address is the South East does not give you any right the share of UK wealth than the rest of us.
Posted by on Apr 01, 2007 @ 03:09 PMOne problem with regional transfers at the moment. is the way they are skewed by the current devolution settlement.
On issues like student fees, prescription charges, and cancer drugs, the Scots and Welsh have got a more generous regime than the one in England, even though in many cases Scottish MPs and Ministers have had a decisive say in imposing the latter.
This issue is going to be come much more salient once Gordon Brown is PM, and most of the UK can ask why his constituents get a better deal than they do.
Combine that with the Scottish elections, and I expect the coming months to be the biggest watershed for the UK since the 97-98 period.
Northern Ireland may not be ready yet for full fiscal autonomy yet, but it is important to think about where the future lies, and the corporation tax debate is a part of that.
In the short term, yes, a corporation tax cut is bound to be anathema to the current UK Government. In fact, it’s hard to think of a policy better calculated to threaten Gordon Brown’s political interests.
But in the medium term, I think that the English will be more concerned about the unfairness of the current regime of regional transfers than about the threat of tax competition.
Some of Brown’s compatriots have already cottoned on this:
SHONAIG Macpherson, chairman of the Scottish Council of Development
and Industry (SCDI), says Scotland’s political leadership must
re-examine its fiscal options, widen its horizons, and develop a
clearer sense of national priorities if the country is to avoid being
overwhelmed by externally-imposed changes.
In a strongly worded speech to delegates at the SCDI’s annual forum
in St Andrews last night, Macpherson warned that political, civic and
business leaders must think more widely about Scotland’s fiscal
position in the face of potential changes to the Barnett formula.(Scotsman)Posted by on Apr 01, 2007 @ 04:24 PMJenny McCarthy?
Posted by on Apr 01, 2007 @ 06:34 PMBill
That’s McCartney of course
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2007/04/01/do0109.xml
Posted by on Apr 01, 2007 @ 07:06 PMDan
Several points.
Though I have earned much of my income in NI I make my returns in London where I also live. In many ways the SE benifits from money earned elsewhere.
The argument about tax is not about wanting any special treatment, or money not due, or living of handouts, it is about trying to set up structures that enable NI (and other regions) to compete and be self reliant. NI is the only part of the UK with a land border and this requires special consideration.
Personally I would like to see more fiscal control and responsibility given back to all UK regions. Among the measures I would like to see adopted are local income tax and abolition of rates, taxes on wind fall profits from planning changes of use to help pay for the necessary infra structure, a look at local duties and how their current level causes a cross border flow of trade (out of NI), increase in University places, consideration given to the practicality of joint currencies etc etc etc. None of these we can do. Our hands are tied.
I am sorry for the delay trying to clear up before heading out East again, which neatly brings me to my final point. In the modern world business and money move to where it can make a better return. In Britain (generally not just NI) we have built up an administrative nightmare that is grossly inefficient. Is the half of it actually needed, and to what useful purpose? Some time ago I mentioned a development that I was involved in in NI which is still wallowing through the planning process, in India similar project built sold and on to the next one! This is not an isolated incident.
Also look at material costs, I cannot think of any material or product that I cannot source cheaper in the East. High time Britain and Europe generally woke up to reality. Fine that people like myself earn income abroad or receive dividends from foreign companies, or local companies that have moved. That income helps our national take, but there is no way that we can run a successful economy on that basis and those that earn in such a manner can easily reside where ever suits them or move assets to where suits. Economically Europe is in rapid relative decline.In 50 years we will be well down the economic pecking order.
Posted by on Apr 02, 2007 @ 10:41 AMYou know the justifiable outrage that was recently expressed following the announcement of £1.2m of taxpayers money allocated to the UDA for “community development” (aka “Danegeld")? People saying “If I set up an illegal organisation and carry out drug dealing, extortion and murder can I get the same?”
Well, apply a similar argument on a much bigger scale and you get a very reasonable argument that could be made by all the other relatively poor regions of Britain (relative to the South East) - “If we kick off 30+ years of civil disorder can we have a reduction in corporation tax as well?”
Posted by on Apr 02, 2007 @ 10:42 AMI think Ian sums it up more brutally than I would dare. Lots of people have made good points as to why low corporation Tax is a good idea, I have no problem with that and happy to debate the pros and cons of the change on a UK wide basis.
My problem and that of a lot of people in the rest of the UK is with arguing the case for introducing it on a Northern Ireland only basis because: we are “special”, are nice!, we “deserve it” etc etc.
There is a lot wrong with the ecconomic management of the UK, intrest rates have been set to cool an overheating housing market in the South East and damanged manufacturing in the Midlands and Scotland, for example. So lots of your arguments if run on a UK wide basis will gain sympathy,
i.e. dramatically lower corporation Tax for the UK the Tories and their supporters could sign up to,
Special treatment for ALL regions with above average unemployment, Labour and their supporters could sign up to.
Special Treatment for Northern Ireland on it’s own will simply annoy the core supporters of both big parties and therfore beyond small items in the margin will not happen.If you are in the Union learn to argue for what you want to happen as being to the benefit of all and you may well deliver it. Arguing from the point of view of we are special is simply going to annoy the rest of the UK.
Posted by on Apr 02, 2007 @ 05:31 PM
