“interpretation that this is a kind of Trojan horse for a united Ireland is 100% wrong”

The Sunday Times carries a Liam Clarke interview with Peter Hain in which, among other points, the Secretary of State for Wales and Northern Ireland expands, or rather contracts, the scope for his envisaged all-island economy, explicitly ruling out any variation in corporate taxation in NI as compared to the rest of the UK – “You can’t have a differential tax regime, whether it is corporation or petrol tax, across different regions of the United Kingdom.” – which was one of the points made last week by Alan Ruddock in his Sunday Times article on Hain’s disingenuous call, noted here previously.From the Sunday Times

A key part of his strategy is increasing north/south co-operation and developing an all-Ireland economy, though he rules out two measures that have cross-party support in the province — reducing corporation taxes to southern levels or bringing the north’s high fuel taxes into line with the republic’s. “You can’t have a differential tax regime, whether it is corporation or petrol tax, across different regions of the United Kingdom.”

Despite that, he predicts: “There will be a lot more north/southery. Not gratuitous poking-unionists-in-the-eye north/southery, but common-sense practical north/southery to improve the quality of life and opportunities for people.

“The interpretation that this is a kind of Trojan horse for a united Ireland is 100% wrong. It is about whether the people of Northern Ireland are going to enjoy prosperity and opportunity in the future.”

Some of what he has in mind may be too much for the Irish government, from which Hain expects help to shoulder the burden of building up the north’s private sector. He suggests that Dublin use its muscle to secure inward investment for the north and even encourages Irish companies to transfer some of their operations across the border.

“There is recognition in the south that that is the way to go,” Hain insists. “Just as, for example, you have British and Irish companies establishing themselves in China and India and eastern Europe without necessarily losing jobs at home, I can see the opportunity for businesses in the republic, where skills are now short because it is overheated, actually seeing advantages in relocating part of their businesses north of the border.

“I was talking to the Irish foreign minister, Dermot Ahern, about the common marketing of the island of Ireland to investors, where we were not seeking to do each other down but were seeking to maximise international investment either side of the border, and particularly for the republic to use its clout in Irish/America to get investment up north.”

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  • GavBelfast

    It may be only a small thing, but no tax is levied on air-tickets on routes within and between the Highlands and Islands of Scotland.

    And what about ‘Enterprise Zones’?

    So there are precedents.

    I think Hain is wrong.

  • Henry94

    Gav

    I don’t think Hain can offer it if the parties haven’t looked for it. We need an economic plan for the north and if it is going to have any chance of working then tax has to be part of it.

    But it’s for the parties to agree it and push it. If the four parties agreed and presented a plan there would be a strong case for letting it happen.

  • jim

    It is not Hain’s decision or that of the British Exchequer to hold the livelyhood or Irish people to ransom. NI Executive have in its right to hold a referendum on such incentives.

    Everything is possible.

  • Crataegus

    “You can’t have a differential tax regime, whether it is corporation or petrol tax, across different regions of the United Kingdom.”

    Of course you can have different tax structures in different regions of a state. All you need is the will.

    Parties here should stop trying to use the economy as a political football and try to agree a package of measures that would improve the prospects for business here which could be put to the secretary of state as part of the conditions for re-establishing the Assembly. Debate about trying to create a few jobs wouldn’t that be refreshing.

  • George

    Crataegus,
    “Of course you can have different tax structures in different regions of a state. All you need is the will.”

    I don’t know about that one. Ireland used to have varying corporate tax rates for foreign and indigineous companies and had to introduce a flat one as it was considered “state aid” by the EU.

    It also had to withdraw grants to Intel last year.

    It is my understanding that there has to be a standard national tax rate (income, VAT and corporate) within a country.

    Open to correction on that but that is my understanding.

  • Brian Boru

    The Unionists think a British minister wearing a green tie is a step towards a United Ireland. The paranoid needs to give way to a recognition of the economic potential of cross-border co-operation.

  • Cahal

    Er, did he just compare the north to “China and India and eastern Europe”.

    Spot on.

  • Crataegus

    George

    There is a big difference between having different tax rates between various classes of company and therefore being open to accusations of subsidy and having the same tax rates for everyone within a region. We have different tax rates from one state to another so why not between regions of a state? As Gavbelfast correctly pointed out we did have Enterprise Zones. But I am not an expert on European law.

    Given the background if a comprehensive package were put as part of the outworkings of the agreement it becomes a political possibility as the peculiar circumstances would not set a precedent either for the other regions of Britain or for the vast majority of Europe.

    I think this subject is one worth careful consideration, with an open mind, and if all are to benefit the answers are probably far from obvious.

  • Moyle Rover

    Was it not the case that the scottish nationalists ran a campaign under Alex Salmond about seven years ago called a penny for Scotland in the first elections to the scottish executive. The general idea was not to take a penny cut in income tax that had been given from Westminster in that years budget and use the extra revenue for public spending, hospitals schools etc.
    Needless to say the scots preferred the penny in the pocket and the nats did badly however it would have been a clear case of differing tax regimes in the UK. I am certain that the scottish executive have tax varying/ raising powers wheras the assemblies in Wales and NI do not, yet.
    If an assembly was functioning correctly and all local parties pushed for tax varying powers westminster would find it impossiblke to say no having set a scottish precedent.

  • smcgiff

    I think your right Moyle.

    But is the ROI supposed to set its Corporate/indirect tax rates in discussion with NI?

    Or, can you imagine NI aping the Republic every time there’s a budget change on Petrol or Corporate tax rates. There’s stability in CT rates now, but will they always remain so.

    I’m not sure certain NI politicians could stomach such a link. Despite the fact the ROI closely links its business practices with the UK – I’m thinking company and even general law. Also, the ROI adapts accounting polices agreed by the CCAB (although the all Ireland ICAI are part of this org, it’s mainly driven by the British accounting bodies) – I’m not so sure NI is mature enough for it to allow it to swing both ways.

  • Scotsman

    Scotland does have the following tax powers:

    1- It can vary the basic rate of income tax (excluding investment income) by up to 3p in the pound. This would lead to an equivalent amount of its income from the Treasury being held back or topped up- £280m for each penny change either way.

    The other legal alternatives/additions could include-

    1- Scrapping all business rates (costing local government a quarter of its income)
    2- Scrapping council tax (costing local government another quarter of its income)
    3- Changes to certain fees etc.
    4- Asset sales (eg housing and Scottish Water)- in negotiation with the UK Treasury.

    The real problems with such actions are:

    1- Lack of control over borrowing (Treasury in charge)
    2- Moral hazard, where the additional income allegedly generated from tax-cut led growth (extra VAT etc) goes straight to the Treasury.

    So for the Scottish Executive it is easiest to just spend its money and keep quiet.

    In theory, there is a Barnett Squeeze, wherby if Gordon Brown increases public spending, Scotland’s share rises proportionately less and it very slowly loses its historic advantage.

    Expect a new funding formula based on poverty or sparsity of population if things change too much.

    But don’t expect Treasury to offer Scotland any kind of fiscal autonomy soon- over corporate tax, especially that relating to North Sea Oil (£6bn a year and rising)

  • Brian Boru

    Supposing after independence, if we in the South had opposed of closer trading-ties with Britain because of the misplaced notion that it was “a step towards reincorporation into the Union” (!). This kind of economic-isolationism from the Northern Unionists is clapped-out and self-defeating.

    GavBelfast which part of what Hain said do you think is “wrong”? The idea that the South should use its influence in America to get investment for the North? If you are really opposed to that then you must be a very bitter individual in your attitudes to Catholic Ireland. Grow up!

  • barnshee

    I despair of the economic/fiscal illiteracy displayed here.

    Repeats

    “You can’t have a differential tax regime, whether it is corporation or petrol tax, across different regions of the United Kingdom.”

    Cheaper petrol tax in N Ireland– fill your boats here– its all part of the UK you see can`t stop you.

    Lower rate of CT –incorporate here -can`t stop you old boy.

    Lower rate of Income Tax- employ everyone (on paper) from our NI Company (see above)

    Fiscal/enonomic and Tax lessons all round please suggest you all get to GCSE standrds ASAP