The Corporation Tax cut experiment – lessons learned from The Azores

The rocky outcrop of The Azores has been talked about more than is usual in Northern Ireland in recent months and years.  This isn’t due to its sudden explosion in popularity as a holiday destination for the good burghers of Ulster, but because of a 2006 ruling of the Court of Justice of the European Communities.  This decision concerned Portugal allowing its autonomous regions to reduce the rate of personal and corporate taxes by 30%, which the territory of The Azores duly exploited to the full by cutting its tax rates by this amount in the year 2000.  When the tax cut was implemented, the rate in The Azores was 26.18% compared to 37.4% in the rest of Portugal.  Today, the rate in mainland Portugal is 23%, and the rate in the Azores is 16.1%.

The Court held that Portugal’s decision was, in fact, a form of state aid, and was only legal if the cost of the lost taxation revenue was borne by the territory itself.  This decision affects Northern Ireland in a fundamental way.  For some time, it has been the stated aim of the Northern Ireland Executive to equalize the Corporation Tax rate across the Irish border; the rate in the Republic is 12.5%, whilst the rate in Northern Ireland (for large companies) is 21%.  It has been stated that equalizing the rate on both sides of the border will attract jobs and investment to Northern Ireland, allowing for equal competition for foreign direct investment and stimulating entrepreneurial activity.

However, the Azores ruling means that the Northern Ireland Executive will have to pay for this tax cut by a reduction in the block grant, the money distributed from Westminster to the Northern Ireland Government, and therefore must be paid for in terms of a reduction in Northern Ireland Government spending.  In fact, the total reduction in spending provided for in the draft budget (£213m, although this figure masks increases in Health, DETI, and Education spending, so the actual cuts are far higher) is eerily similar to the foregone revenues from the proposed Corporation Tax cut, which I have estimated at £222m, within a few percent of this sum.  So what would have been a large enough cut in local government spending has become a very severe cut to pay for the Corporation Tax cut.

So are The Azores luxuriating in their new high growth, high-tech economy after reducing their own Corporation Tax cut rate?  Well, it is true that when they reduced their tax rate in 2000, their unemployment rate did indeed decrease.  For a while.

Azores Unemployment Graph

The Azores had a sprightly decade from the implementation of the Corporation Tax cut, economically speaking.  They were helped by a benign wider economic climate, substantial assistance from European Union funds, and (this may start to sound familiar) a substantial and growing public sector, and a booming construction sector.  The lower rate of Corporation Tax may have played a part too.

However, the party didn’t last.  Despite managing to keep a gap between unemployment rates in The Azores and those in the rest of Portugal until 2011, the rates have since converged, and now unemployment in The Azores is higher than Portugal as a whole, at just under 16%.

The Azores have been under pressure to get their deficit and large public sector headcount under control, but the Socialist administration of the archipelago have proved resistant, and in further echoes of the situation in Northern Ireland, have had to borrow €135m, linked to public sector reform and fiscal restraint.

There will be no such forbearance in Northern Ireland, however.  Unlike the situation in The Azores, where the Corporation Tax cut was essentially on tick, and in a friendly economic climate, the cuts in Northern Ireland will cause widespread job losses, and are in the midst of a sustained difficult economic environment.

Of course, there are many differences between The Azores and Northern Ireland.  The Azores don’t have a land border with an EU state with a lower tax rate, and are much smaller both in area and population (246k in The Azores, 1.8m in NI).  But the parallels are interesting.  Despite having very benign circumstances, the Corporation Tax cut in The Azores did not lead to a sustainable, private-sector led economy, and they are now faced with an unemployment predicament that will prove difficult to resolve.

The European Union have released a very interesting document on the situation in The Azores.  Particularly interesting is the section on unemployment, “A high level of unemployment, a new reality in The Azores”.  Various policies for mitigating the unemployment dilemma are discussed, key amongst them youth apprenticeships, and schemes to encourage women into the workplace through family-friendly policies, especially those from disadvantaged backgrounds.  These are precisely the schemes that are being decimated by the cuts at the Department of Employment and Learning, as well as the cuts to university funding that are likely to seriously hamper the long term skills base.

The entire concept of encouraging growth by lowering corporate tax rates has come in for serious criticism from academics in recent weeks, with a paper by Alexander Ljungqvist and Michael Smolyansky, economists at New York University, arguing that corporate taxes at a regional level are asymmetric, meaning that raising them does harm but cutting them doesn’t actually do any good.

Northern Ireland stands at a crossroads.  It proposes to grant local corporations a large tax cut, the benefits of which are debatable at best, and which will be paid for by cuts to the services that other countries have shown can mitigate unemployment.  It may be tempting for the European Union, drafting a document in the year 2026 entitled “A high level of unemployment, a new reality in Northern Ireland” to state, simply, “we told you so.

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  • Zeno1

    But that sounds like you think that diverting money from the public purse to the private sector, who don’t actually need it, is a bad idea? But its fine really because they can cut thousands of jobs in the public sector to make the necessary savings. And even better, their masters are letting them borrow their own money to do it AND letting them sell their own assets.
    The only interesting thing left is how long it will take the mugs who vote for these people to catch on. Northern Ireland has just been privatised.

  • A lack of (genuine) democracy in (in)action

  • CrumlinT

    It really is scary that the DUP are insistent on decimating the public sector to fill the coffers of big business. They claim to represent the ordinary person but, in truth, they will bring this place and everyone living in it to its knees. By then it will be too late for the suckers who believed in and voted for them. NI PLC will go into administration.

  • chrisjones2

    It really is scary that the DUP are insistent on decimating the public sector to fill the coffers of big business.

    have you ever looked at the efficiency of the NI public sector? Its appallingly badly run

  • Zeno1

    There is always Private Healthcare and Private Schools if you don’t like it. They will probably bring in charges for calling out the Police or Fire brigade if you wait a while. Water charges are on the way and as soon as they work out a way to charge you for fresh air that will be implemented.

    But it will all be terribly efficient. if you can afford it.

  • Zeno1

    It is truly astonishing that any of the parties could have signed up to this nonsense. The DUP isn’t the greatest surprise to be honest, but Sinn Fein have a little explaining to do. They agreed to everything and got nothing. Not even an Irish Language Act. They will implement the Welfare Cuts, pay the fines and sell off the peoples assets to funds big business. Not to mention borrowing money from the British Government to cut Irish Jobs. Shinnernomics.

  • salmonofdata

    The efficiency or otherwise of the NI public sector is besides the point.

    The cuts that are being made to fund the CT cut are, in the main, from the Education budgets, the Department for Education and DEL, and they are being made to frontline services in precisely the areas that would help mitigate unemployment. Whilst all the five Executive parties did include, in their 2011 manifestos, a desire to reduce the Corporation Tax rate, from the DUP’s aim of a 10% rate to Sinn Féin merely wanting to “harmonise all-Ireland taxation”, not one stated that it was their intention to gut the Education budgets to pay for it.

  • CrumlinT

    It’s desperation politics from both parties. They are more concerned with their vote base than the consequence of their actions. They also believe the media hype over “political crisis” when, in most circumstances, people here don’t really give a fiddlers. It’s just unfortunate that the electorate doesn’t have a credible party to vote for and dispose of these creations.

  • D99

    It’s not just the DUP, nearly all the parties want to cut corporation tax – especially the Alliance Party & UUP. Just listen to Farry & Nesbitt.

    I wonder why: Ideology, corporate lobbying, genuine incompetence? Or something else? If there’s no money to prevent cuts to departments responsible for welfare, health, education and employment, how can they possibly justify allocating more money to corporate welfare?

    SDLP & SF are also in favour of cutting tax on corporate profit, seemingly because of some sort of deluded notion of consistency across the island of Ireland. They are probably more likely, but not certain, to back off when the time comes and the implications are further spelt out.

    As far as I can see, only the Green Party is against cutting corporation tax.

  • Ernekid

    I find it depressing that local politicians think that their best strategy is to make Northern Ireland a tax haven for international corporations and will happily cut the public sector to do so.

    One of the few things Northern Ireland has got going for itself is its grammar schools and universities churning out educated Young people. If we don’t have that, what else do we have?

  • CrumlinT

    Who “runs” the public sector? If it is inefficient then there are alternatives to selling it off to the highest bidder who will, if experience is anything to go by, provide an inferior service, employing slave labour. But then the people who “run” the public sector will be delighted with their directorship and consulting roles in these private companies.

  • Zeno1

    “I wonder why: Ideology, corporate lobbying, genuine incompetence?”

    Option 3 has got to be favourite on all previous history.

  • Zeno1

    Sinn Fein have shown contempt for their voter base. I think they might pull out of it when someone explains it to them.They are literally agreeing to giving hundreds of millions away to big business and agreeing to pay for it by introducing Welfare Cuts, putting thousands of Irishmen on the dole, selling off our own assets and borrowing our own money to funds it all.
    Oh and they still have to pay the Fines the Tories stuck them with. But if they are good boys they will be let off half of next years.

  • CrumlinT

    Couldn’t agree more. What concerns me is the green/orange card going into overdrive for the forthcoming elections. It will work, as it usually does. Then the political representatives will believe in their own economic policies. God save us all. Is there no-one out there that can represent the majority of people here?

  • Ernekid

    I’m really quite worried about the extent of corporate lobbying in Northern Ireland in the future. The entirety of Northern Irelands political establishment could be bought for a few million. Spare change for big international corporations. if we attract the big bucks from abroad our shitty little politicians will be bought and sold easily. Corruption will soon be totally endemic.

  • Mister_Joe

    To those that have, much will be given, to those that haven’t, well screw you.

  • SeaanUiNeill

    Because no party, other than the Green party, has any idea of how they might develop a real local economy beyond encouraging building development and bribing outside companies to locate here. They keep digging down into the same hole that has failed them in the past in the hope that something different will happen this time. And it gets worse and worse……..

  • SeaanUiNeill

    “Corruption will soon be totally endemic.”


  • SeaanUiNeill

    We won’t have an educated youth a generation from now. The gross inefficency of all our politicians, who simply score trivial points against one another rather than building a local economy, has ensured that. Thye have simply hoped that the money would keep flowing endlessly to support them in their sillyness. What we will have is a grossly inefficent farming sector, and anyone related to “a farmer” who simply owns a little rural land that might qualify, floating on a buoyant wave of “widely interpreted” farm payments.

  • SeaanUiNeill

    “NI PLC will go into administration.”

    This is what has happened, it’s simply that no-one wants to admit it. The next stage will be some form of direct rule, but probably by those big U.S investmnet corporations who are slowly taking ownership of all our assets in the wake of Cerberus Capital Management’s NAMA purchases. After all, the pensions of many government and public sector jobs in the U.S. will rely on how sucessfully such corporate bodies can capitolize on the price of land and property here, which certainly won’t be hindered by the new corporation tax rate!

    The needs of our community, no matter what their “political flavour” is a complete and utter irrelevence to such gaint corporations, and with moves to attract such “investment” these are the people who will be calling the shots from now on.

  • Jeremy Cooke

    What about Northern Ireland as the first EU-federal territory? Would there be any takers for that, or would everybody be equally outraged?

  • D99

    Green Party could be a real alternative if they become a bit more assertive and build some momentum. But the media don’t seem to give them much coverage and they’re not standing everywhere. They probably need to be more active in encouraging membership and emphasising their socio-economic policies as well as their environmental stance. Otherwise, they’ll remain pigeon-holed as a one issue interest group in many people’s eyes.

  • SeaanUiNeill

    Hi D99! The media do not cover anything other than mainstream parties, who are “news” because they are mainstream….at least that’s how it was when I was still active in the media.

    That or a bit of violence, so when the Greens start a bombing campaign, they get slots! Seriously, you are perfectly right, they are seen as a one interest group, even though the health of the environment is the simple base line for us to have any kind of existence.

  • SeaanUiNeill

    “Is there no-one out there that can represent the majority of people here?”

    You, me, Zeno1, etc! As long as we are looking to an entirely discredited representative system to provide professional “carers” who will look after our needs in the asylum we inhabit, we get the cynical careerists we see up on the hill. We need something more citizen sensitive where we do not simply pass the baton of responsibility to professionals through elections, but keep it firmly in our own hands. The electoral system will always fail to deliver anything other than a crowd of frauds looking to their own self interest, when has it ever been otherwise?

  • SeaanUiNeill

    And, Zeno1, just how many of us are compelled by crippling mortgages to sell the greater part of our lives to the banks while we are still young and vital, in order to simply have somewhere to live! These private interests own pretty much all of our lives, and how does that differ from a form of “open weave” slavery?

  • D99

    Problem is, most people who vote, vote on cultural (sectarian) grounds and the politicians know that. Hence they have no incentive (and even have a disincentive) to change. They have a kind of smug confidence that the status quo will keep them in power.

    But that could change more quickly than a lot of commentators think, if there was a real, assertive, non-sectarian alternative. One that could attract support from that growing half of the population that are disillusioned with and disaffected by the current choice on offer.

    People are already angry about recent revelations of self interest and corruption; and, with further cuts on the cards, they have very little confidence in the competence of the current crew to do anything but make things worse.

  • D99

    Yes, from a global perspective, the health of the environment is by far the most crucial issue. In a sense, everything else is a temporary distraction. But when times are tough, people focus on the socio-economic things that they think directly impact on their lives right now. It’s hard to concentrate on climate change when your choosing between heating or eating, or when you’ve just lost your job, or can’t find one in the first place.

    In a way, everything is connected. We need environmental action; but we also need a living wage, a wealth tax and an end to all this absurd ideological austerity. Even on its own terms, it doesn’t work; and another crash is just around the corner.

    Eventually, when things get even worse, there will be change. But there’s no predicting what it will look like. It will be interesting to see what happens over the next few weeks when Greece demands a write off of debt and other countries have to decide whether or not to follow their example.

  • Zeno1

    That’s why sortition is the only true democracy.

    We don’t need career politicians or political parties or elections. All of those are just there to subjigate the working classes.

  • D99

    I agree, promises will be made and broken. Although, all the main parties will be offering minor variations on austerity, rather than any real alternative that would involve systemic change. Instead of delivering dreams, politicians now promise to protect us from nightmares.

    And it’s not so much jam tomorrow, as meaningful survival. But, I agree, even this is a hard sell to people with more immediate and pressing needs.

  • Zeno1

    Sinn Féin merely wanting to “harmonise all-Ireland taxation”

    Hey, maybe they want to harmonise all Ireland unemployment as well. Now it makes sense…..

  • D99

    Probably not, as they don’t see a viable alternative right now.

    And truth is a slippery notion, just because you choose to vote for A or B or neither doesn’t mean you’re happy or content with the choice on offer.

    What I’m suggesting is that an alternative to “the current cultural voting paradigm” would be timely and most welcome from my perspective.

  • Brian O’Neill

    Could you expand? What is a EU federal territory?

  • SeaanUiNeill

    Hey, Zeno1, I entirely agree. And in a small area that should be simple to manage such as that in which we live, it would be an easy experiment to run. And we might get some talent for a change, but at least a limit on how much outside influence favouring big financial players can actually be exerted on representatives without the kind of continuity elections ensure. Pity they won’t let us give it a whirl……..

  • Ian James Parsley

    This is an interesting piece, but two further important points:

    1. It is usual to blame the European Union for policy restrictions, but actually the Azores-style restriction has applied within the UK itself since 1938 – under the exact same “parity” arrangement of of which is currently seeing our budget reduced to pay for a differential in welfare provision. We must pay for any tax or welfare differentiation.

    2. We do not know the climate in which NI’s Corporation Tax would be reduced. The power to reduce it is due to be transferred two years and four months hence, but there is no obligation on the Executive to use that power immediately or indeed ever.

    It should be noted that the realpolitik is that if NI gets and uses the power, Scotland will demand and get it too, reducing the competitive advantage (and likely consequent job creation) considerably – though of course the cost from devolved public expenditure would be the same.

  • notimetoshine

    I would imagine as you say that Scotland reducing their corporation tax rate could dampen the advantage of any reduction. Add to that a more stable political climate, bigger population, a high number of quality universities, a far more developed economy, quality transport links and many other factors would play a role in placing NI in a decidedly weak position in any competition for FDI.

  • Ian James Parsley

    Well, it would put it in the same position it’s in now.

    And we can compete now. We have created a vastly more significant media industry than Scotland in the past decade, for example.

    But yes, we need to take our advantages (lower costs, lower reliance on uncertain industries, certain better skill bases etc) and work on the weaknesses you point to. We have to do that either way.

  • Ian James Parsley

    But there is also the issue that what the people want is actually impossible.

    You can’t protect current levels of public spending without raising taxes. There is a choice there – but currently we’re all too busy pretending we don’t have to make it to allow even a debate on it.

  • notimetoshine

    Would the money that the corporation tax will coat be better put into skills development, enhanced invest NI activity and maybe a business rate cut? Maybe this would be better at developing our our own local business and help it scale up as well as attract more FDI?

  • Ian James Parsley

    Sinn Féin is expert at pretending crushing defeats (which were inevitable all along) are really glorious victories (and moves towards their fantasy of turning Ireland into a European Cuba). They’ve been doing it since April 1998.

  • SeaanUiNeill

    Ian, I entirely agree that the professional politicians have debauched their electorate by spending well beyond their tax income annualy, and that the consequent crushing debt burden of government offers very little manouverability. But just how much of this government outlay was simply unnecessary? I am in a community where farm payments are made out to relatives of local farmers. Such people hold farm numbers, but never come near the place, simply collect the money in their bank accounts. Large businesses that have bought land collect millions yearly in the same manner, and our farm payments locally are so generious that the price of rural land is usually higher here than either the UK or the ROI because of its utility as a milk-cow funded by the state. This is historically because both main parties here have a large rural voting base the need to sweeten. Issues such as this should be foremost in a real debate, not how our masters can squeeze the needy even more to sustain such vote sensitive expenditure.

    This is simply one example I can offer, but in the drive to a general “Middle Classlessness (© New Labour 1997)” we have created numerious white collar jobs either in the public sector or in private bodies hived off from the public sector and still sustained by public funds (indirect public sector) that, although they will suffer from austerity cuts, will still not seemingly suffer in the same manner in which the truly needy will be made to suffer. And, from what I hear, we are more likely to loose motivated civil servants than the old dead wood whose redundancy payments would be too expensive to effect at this time. And don’t get me going on the woeful effcet the cuts will have on education……

    The debate is needed, but the entire agenda of the debate insists that the heaviest burden of cuts fall on those least able to absorb them. This is an elitist agenda, and as long as the representative system absorbs even the most radical activist elected into its warm bath of self-importance (or calls them “odd and unco-operative” if they are resistant to this “grown up” professional politician conformity in any way), we are unlikely to see such a debate carried out in the real interests of the general public, especially the most vulnerable and needy. But the entire austerity debate has been organised to favour the “sucessful” and demonize those destroyed by the Thatcher Long Revolution.

  • Jag

    Remember that old joke – “if the black box on a plane is indestructible, why don’t they make the whole plane out of the same stuff”?

    If, as is strongly argued for by Westminster, devolving corporate tax rate setting powers to Northern Ireland, and the lowering of corporate tax rates would make the NI economy stronger, then why isn’t GB doing it? At present, its rates are 20-21% compared to the 12.5% standard rate in the Republic. If the British Treasury thinks a 12.5% rate in NI would be transformative, then why not make it uniform across the UK? Maybe changing their IT system would cost GBP 10tn or something….

  • If only.

  • SeaanUiNeill

    Thedissenter “If only”.

    Twenty five years back I was running a small film company in Soho. The buzz was all in the white heat of privatisation of the Public Sector, and were told just how London would benefit from the efficency that the markets would introduce. I watched, just before coming back home for good, as the strong Victorian sewage system’s metal piping was being replaced by cheap yellow plastic pipes. These are fracturing and leaking already, and the gas system in London is so weakened by “upgrading” that we have central London gas explosions, with flame clouds flaring out on Piccadilly. The comment threads on websites are full of cries of woe by suffers of the consequences of this privatisation. How many times does it need to be said, to make a profit you buy cheap and sell expensive. This has never been any sane person’s recipe for getting the purchaser the best out of anything. And if you cannot develop an efficent and motivated public sector, simply throwing the responsibility for this to the wolves offers a recipe for destruction, not revitalisation.

  • Ian James Parsley

    I’m sceptical about cutting Corporation Tax, but it won’t “fill the coffers of big business”.

    Private sector wages are 41% below public. Why are we “filling the coffers” of Health Administrators?! There is no doubt a rebalancing is needed.

    What we should do is ask seriously precisely what such a reduction would do.

  • Ian James Parsley

    There is almost zero corporate lobbying in Northern Ireland (outwith planning). If businesses had the remotest clue how to lobby, they wouldn’t still be two years away from this potentially happening.

  • streetlegal

    Cutting corporation might have been worthwhile around 10 years ago – but that ship has long since sailed. The reason jobs have been coming to Belfast in recent years is because Arlene Foster has been paying huge financial incentives to the companies concerned. That ship has also sailed as Stormont no longer has the money to make moving operations to Belfast attractive. After all why would anyone think that Belfast would be an attractive place to live and do business?

  • Ian James Parsley

    That doesn’t follow, of course.

    The public sector tends to employ too many people – its answer to almost any problem is “recruit”.

    Leisure Centres in Belfast were a good example. 60 staff will lose their job in the New Year as they have now been taken over, but you’ll find they become more efficient and quite possibly cheaper to the customer as a result.

  • SeaanUiNeill

    I couldn’t agree more, Ian, “I’m sceptical about cutting Corporation Tax”, me too! I would like to see some serious analysis of the consequences of the cut, beyond some kind of Cargo Cult thinking: “if you build a straw model of something you have seen somewhere else John Frum will bring all the goodies”. Serious in depth analysis of the benefits and problems seem to be well out of reach of anyone involved at Stormont despite the massive network of advisors the OFMdFM seem to support on public payments. More real hard headed thinking is urgently needed to get us beyond the “monkey see, monkey do” approach to economic development that I seem to detect every time I have anything to do with Stormont.

  • SeaanUiNeill

    The real question is why the profit motive (“buying cheap and selling dear”) should be in aposition to offer better service. Logic dictates that a disciplined and motivated public sector should be in a much better position to offer the general public honest and inexpensive service, than anyone driven by having to produce dividends or service inhibiting bank loans.

    That’s the real issue, and in my experience, the so called answer offered by a privatisation bubble that is only starting here, has long ago entirely burst in London, as I’ve commented on below. The threads I read about London services are full of rage both from the sufferers from the new inefficencies taht have developed out of privatisation, and by the employees who are constrained by management and the pressing demand for profit into doing nothing whatsoever about these failures. As I’ve said below, if you cannot run something efficently in the public interest when you have full control over what can be done, then throwing it to someone else (“the Wolves”) with a driving profit motive to do the thing better is seldom the long term answer, it gets it of your hands, but also gets it out of your control.

  • SeaanUiNeill

    Runkerry, say? Oh, I note your caviat “(outwith planning).” So that cuts Cerberus, etc, out also, so far. Most private money, (other than long term players such as Bombardier, etc,) made here seems to be made on land and devlopment deals, so leaving out lobbying for planning is rather disingenious as it is, seemingly, the principal local economic activity.

  • Zeno1

    If the public sector is inefficient then who is responsible for that? Are they not employed by government? Does this mean Government is also inefficient and so incompetent that they are incapable of the simple task of employing people who can do a decent job?

  • Zeno1

    The telling part of this is not in the comments. Maybe the lack of comments from the died in the wool hardcore supporters means they are struggling to explain this great victory for their party?

  • Jeremy Cooke

    To me one of the problems in NI is that politics is a zero-sum game – if one side wins it must be at the expense of the other side. I’d suggest that the GFA/BA was constructed, or fudged, that both sides would be able to claim victory without really believing it. We now see a fairly dysfunctional government in place at Stormont with little likelihood of a consensual and agreed society emerging.

    I’ve often felt that the people didn’t suffer enough during the “Troubles” – if several 10s of thousands had died, if Newry had been shelled to the ground, if Bangor had endured a 10-moth siege, if people had a taste of what a real war was then it may have encouraged them to value peace and truly reach a compromise; but they didn’t and they haven’t.

    I digress – if the sovereignty of NI was vested in the EU and it became an EU administered state then the zero-sum bounds are broken – both sides lose. Consider Labaun Island, essentially administered by a single council with representatives in the federal Malay parliament; would that not be a model for NI; we’re small enough? A single NI council looking after local government with election to Brussels. On the downside we’d lose most of our talented and selfless political class 🙁

    In return I’d see a federal territory as an attractive option for the EU and with a potential to attract significant investment and tax – what would an exemption from EU VAT do for NI as far as attracting investment go?

    Just curious as to others reactions to the idea.

  • SeaanUiNeill

    You’d think so, Zeno1. I just cannot get my head around why it’s more cost efficent to outsource services from profit making companies, rather than to simply run things efficently in house.

  • Zeno1

    It sounds like a good practical solution but it would never be adopted while the two sides believe the hype fed to them.

  • SeaanUiNeill

    Zeno1, my wife has just drawn my attention to this. You might just find it interesting:

  • Kevin Breslin

    Would you also include the fact that:

    3. Without the EU rules, places like the Azores, regions of other EU zones would provide direct competition to Northern Ireland anyway. The only reason the Republic of Ireland’s low corporation tax works is because it’s prepared to make ends meet. Scotland and the Republic would obviously be competitors but if the rules were liberalized on an EU basis it would make taxation across Europe completely unstable.

  • Kevin Breslin

    what uncertain industries? Retail is probably as uncertain as manufacturing is these days.

    And we don’t invest in R&D, we don’t develop skills.

  • Kevin Breslin

    The Republic was able to develop its skills economy because every scientist and engineer had a business they could steer their research towards.

    In Northern Ireland we don’t think research can be steered by our universities, we think that companies can guide our research and make demands of them. Our politicians so ignorant of the Haldane Principles, somehow think that we can get around the problem of skill matching, by interfereing with the design of degrees and by creating low value skills programs instead of tackling the mobility of the high valued skills.

    The Republic’s big competitive advantage over Northern Ireland is skills mobility. We have Brain Drains, Skills shortages and Public sector funded stop gaps. The strategy is a mess.

  • Kevin Breslin

    Do you not think that if the Republic of Ireland raised its corporation tax rate many of its educated young people, and indeed many of the educated people from the North that work there would lose their jobs or not have any jobs if there wasn’t the corporation tax reduction?

    Surely many corporations paying a lower rate can be better than few corporations paying a high rate? Surely we are already cutting the public sector to finance the subsidies and the tailored skills training programs these companies want to set up here. Corporations need to invest in the public sector to survive, but we are (already) investing in the corporations to save the public sector here, and that cannot work forever.

    And we do have tax evasion in Northern Ireland, particularly at the expense of the Republic. We have bankruptcy evasion from the Republic in Northern Ireland were companies don’t face the harsh penal code from Dublin if they move their affairs up North.