Corporation tax cut ruled out non-shocker…

I THINK most Slugger contributors were canny enough to realise that the review into corporation tax levels in Northern Ireland was a fairly cynical ploy by the Government to fob the parties off and get them into an Executive. And lo, it unsurprisingly came to pass, that Sir David Varney turned out to be a ‘yes’ man after all. A source told the Financial Times that Varney “absolutely dismissed the idea” in meetings with the parties last week. “He discussed a very wide agenda, but it was clear corporation tax was not part of that agenda at all.” Well, it was always pie in the sky thinking that it ever would be.Gold star to Comrade Stalin for correctly predicting the reason why. CS wrote:

This is nothing to do with whether it’s legal or not. Are the Brits going to cut corporation tax here so that HBOS, HSBC, Barclays and all those huge companies in the City of London all move over to Belfast to take advantage of the cut ? Are they going to gut London for the peace process ? I can assure you that they won’t.

And the FT reported:

The Treasury has traditionally been wary of anything that undermines the fiscal unity of the UK, fearing that allowing Northern Ireland to set a lower rate would trigger a “beggar thy neighbour” reaction from other UK regions seeking the same concession.

The Inland Revenue tried and failed in the European courts to stop Cadbury Schweppes relocating part of its UK operations to the Irish Republic, with the UK tax authorities arguing the food and drinks company was seeking to avoid UK tax. Officials say UK authorities would be even more wary of allowing companies to use a Northern Ireland base to reduce their UK taxes.