6 2 mins 9 yrs

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You would need a heart of stone not to laugh at this news!

 

The NI Independent Retail Trade Association (NIRTA) has said the Government’s delay on a decision to devolve corporation tax to Stormont was deeply disappointing. On Tuesday, the prime minister said there would be no decision on devolving the powers until after the Scottish referendum in 2014.  Stormont wants to be able to match the tax rate in the Republic of Ireland.

During the last Assembly referendum, I remember having a public debate in Londonderry with Sammy Wilson and Mike Nesbitt on the economy. Wilson said he envisaged that the radical change to CT would happen within a year of the election. Now it is obvious that there will be NO CHANGE whatsoever to Corporation Tax and the same parties that promised you this in 2011 will promise you it again in 2016.

Here’s the deeper point. Stormont has NO plan to cope with the consequent reduction in the block grant and so this is all POLITICAL posturing!

Whilst the concept of CT reduction is a good one, it is way too crude and economically incoherent. It need nuance and balance. For example, it should NOT be afforded to large multinationals but rather focused on small indigenous business that can actually create meaningful growth that feeds back into the local economy rather than being siphoned off-shore. Welfare will also need to be drastically cut, something all local parties run a million miles away from. So the game in play here is to see if Stormont can successfully pass the blame for their own ineptitude to Westminster, then posture as victims of the baddies over there. I reckon this is exactly how it will be sold to the electorate whose inability to see through this cosmic failure is truly wondrous!

 

 

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6 thoughts on “JAM TOMORROW, NEVER JAM TODAY!

  1. “For example, it should NOT be afforded to large multinationals but rather focused on small indigenous business that can actually create meaningful growth that feeds back into the local economy rather than being siphoned off-shore.”

    Why exclude the multi-nationals? Don’t you want Foreign Direct Investment in NI?

  2. 60% of all private sector employment occurs in small and medium sized businesses. 50% of all private sector turnover comes from small and medium sized businesses. And that is at the height of an economic downturn that has been more likely to harm small and medium sized businesses compared to large businesses.

    That being said the principle reason to lower the rate of corporations tax to the level in the South is to compete with the South for investment. The problem isn’t that local small businesses are choosing to operate in the South it is that large businesses are choosing to do so. Additionally a certain proportion of that 60% of employment and 50% of turnover will come from the supply chain for large businesses. So while any cut in corporations tax will be helpful the only way to be truly helpful in terms of competition with the South would be to cut it to the level of the South for all businesses regardless of size.

    Additionally in terms of cuts to welfare. Theoretically welfare is a devolved issues and Northern Ireland can break from Westminster on the issue. In practice that is unlikely to happen (not least because a large amount of welfare provisions are written in tax law which isn’t devolved) and Northern Ireland’s welfare system will continue to be set by Parliament not the Assembly.

  3. A cut in corporation tax will not bring huge investment due to the fact there are no big factories opening anywhere, even after robbo and martins nice long holidays they failed to attract any sort of investment. Can’t see a cut of that size happening. As for welfare, there’ll be no special treatment here and I doubt there will be a delay in the bedroom tax as it will cost 17 million to keep it out and that money cannot be found from anywhere else. The ‘welfare reforms are coming and they will impact here very severely.

  4. If they were serious about a CT cut they would have presented a creditable plan on how to pay for it. Since they did not do so, it seems this was just game playing. But they should be asked why they did not present a credible plan.

  5. The idea that a cut in corporation tax to (say) 10% would bring multinationals streaming to Northern Ireland is laughable. These guys are only interested in a rate of 0% and that is what they mostly achieve in the Republic. Profits are shipped out to Bermuda or Grand Cayman via “patent and royalty” charges or “interest” on inter-company loans. See Google or Amazon for examples.

    The only thing that will change this is when the G8 (or 9 or 80 or whatever they are now) agree to tax multinationals on the basis of their turnover in each state. So if Google derives 20% of its sales in the UK (even if they are “routed” through Luxemburg or Switzerland) it will pay UK tax on 20% of its global profits, end of. And if it refuses, it can be prevented from trading in the UK. That would put the “tax havens” out of business overnight, except that they will still be able to live off the drug money-laundering, so they won’t starve. But don’t hold your breath.

  6. “The idea that a cut in corporation tax to (say) 10% would bring multinationals streaming to Northern Ireland is laughable.”

    Maybe.

    The MNCs want a competitive CT rate, an educated (preferably English-speaking) workforce and stability.

    NI currently only has 1 out of 3 (and some could even argue that one!). With the CT rate, it would have 2 out of 3. The problem is stability. Would you invest in Dublin or Belfast with the dissidummies and the fleg fools running around?

    “These guys are only interested in a rate of 0% and that is what they mostly achieve in the Republic.”

    Is that factually correct?

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