Well, this is interesting. Sammy Wilson has essentially torpedoed the corporation tax cut, at least until after the next election. This shouldn’t come as a surprise.
Unsurprisingly, ministers are already struggling to implement the cuts agreed to in the last Assembly budget. The arduous, unfinished business of filling the £40m shortfall in the department for employment and learning shows the difficulty Stormont is having finding new savings. The proposed cut in corporation tax would have brought about an additional cut of at least £400m, basically to compensate for lost tax revenue in Northern Ireland. The lobbyists, pressure groups, businessmen and politicians backing the tax cut have never given indication of where this money would come from.
The BBC’s Jim Fitzpatrick hits the nail on the head:
“The Treasury has not yet decided to grant Stormont the power over the tax. Nor has a price been set. With the estimated annual cost to the Stormont budget thought to currently sit somewhere between £400m and £500m, announcing that it cannot happen within this budget period may simply be a statement of the obvious.”
When a high-cost idea comes from the left, the default reaction is ‘that’s very nice, but we don’t have the money’. When it comes from the right, excuses are made, and Very Serious People talk about how it’s all very necessary and sensible. These Very Serious People tend to be the bank economists, economically ignorant politicians and incurious ‘business journalists’ most to blame for the vast public ignorance preceding the big bust of ’08. This vast ignorance might help explain our collective inability to forge a better, alternative economic direction in the subsequent years.
The logic behind the tax cut was always very shaky; the best arguments against can be found here. The big question now is, what else, if anything, the Executive has lined up in the way of economic policy? Is this single, highly dubious, uncosted, now possibly dormant policy all they have for us?