You could start here if you’re looking for an example of a Courageous politician.
Here’s a man of belief who knows what he has to do as a result.
No wonder Michael D Higgins is now President of Ireland.
He makes me proud of my Irish nationality.
Hat tip: Carol Wilcox
This is welcome news from the Press Association:
Any future cut to the corporation tax rate in Northern Ireland will have to wait for at least four years, Stormont’s finance minister has indicated.
Sammy Wilson told MLAs he did not believe a reduction in the business levy, if one was made, would be implemented in the lifetime of the current Assembly.
The power-sharing administration is currently awaiting a Treasury decision on whether the power to set the rate will be devolved to Stormont.
I have been waging what might be called a pretty much one man campaign against such a cut from the safe distance of East Anglia and it looks like sense has prevailed and the cut will not happen.
I’ll count that another success – because in four years this issue won’t be near anyone’s agenda. Game over, I say.
And now let’s move on to stop Scotland committing the same folly.
I have become one of the most vociferous opponents of reduced corporation tax rates for Northern Ireland. I did not intend to be so. I just thought it was poor idea and wrote a report about it for the UK and Irish trade unions.
I’m pleased to note that the FT has now joined the small but effective chorus opposed to this move, saying in an editorial today:
Owen Paterson, the secretary of state for Northern Ireland, says that giving the province the right to vary its corporate tax rate would be “the economic equivalent of the peace process”. Mr Paterson’s enthusiasm has helped the issue up Britain’s political agenda; the government is now completing a consultation on it. Given Northern Ireland’s high levels of joblessness and welfare dependency, the local appeal of the proposal is understandable. For the UK as a whole, however, it raises more problems than it solves.
As it then notes, those problems include senseless tax competition, not least with Scotland and of democratic accountability. As it concludes:
These complications are a heavy price to pay for a reform that will produce at best marginal economic benefits. George Osborne, the UK chancellor, has pledged to await the outcome of the consultation on Northern Ireland’s corporate tax rate before deciding on Scotland’s. He should tell both to go back to the drawing board.
Too true.
But better still, just scrap the idea.
The Belfast Telegraph featured an article yesterday where a KPMG partner in Belfast argued Ireland will never give up its low tax rate whatever Merkel and Sarkozy say and that Northern Ireland’s tax rate must be cut as soon as possible.
KPMG are heavily invested in the plan to make Northern Ireland a tax haven so I am not surprised by the comments. They are, of course, amongst the very few who would gain from this plan which would be massively onerous for the ordinary people of Northern Ireland.
In response the Belfast Telegraph reported:
But anti-poverty campaigner and blogger Richard Murphy said that harmonisation was “inevitable” and called for Ireland to “stop looting other European economies”.
“There is no way this tax competition can continue while the Eurozone is so desperate for cash, it is now not a case of ‘if’ but ‘when’,” he said.
“Ireland will be picked on, it can bluster all it likes but harmonisation will happen. We must question why Northern Ireland is so desperate to copy a system that is doomed to fail and does not work.
“Ireland has already had preferential treatment, it is time for Ireland to grow up and play its part in the international economy and to stop looting other European economies.”
That about sums it up.
Little commented on this morning is clause 10 of yesterday’s Euro deal, which says (my highlight added):
We are determined to continue to provide support to countries under programmes until they have regained market access, provided they successfully implement those programmes. We welcome Ireland and Portugal’s resolve to strictly implement their programmes and reiterate our strong commitment to the success of these programmes. The EFSF lending rates and maturities we agreed upon for Greece will be applied also for Portugal and Ireland. In this context, we note Ireland’s willingness to participate constructively in the discussions on the Common Consolidated Corporate Tax Base draft directive (CCCTB) and in the structured discussions on tax policy issues in the framework of the Euro+ Pact framework.
Three obvious things follow. First, a welcome for this move towards a unitary basis for taxation in Europe. Second, a welcome for this breakthrough in closing down the Irish tax haven. Third a note to the UK Treasury and to Northern Ireland’s politicians: it’s time to stop discussing cuts in Northern Ireland’s corporation tax rate.
There had to be a silver lining in this deal. This is it.
There’s a great article in The First Post Daily under the above headline.
‘The Edge’ – Bono’s best mate – has lashed out in the Baltimore Sun (for reasons best known to himself) describing:
the allegations about the band’s tax matters as “totally false and possibly libellous”.
He also claimed the Irish government had “no problem with U2 basing some of their business activities in Holland” and that “U2 and its members have paid many, many millions of dollars in taxes to the United States Internal Revenue Service over the years.”
Oh dear, he still doesn’t get it, does he?
Legality is not morality. U2s arrangements may be legal – in which case the Irish government may accept them. But they stink when this band demands action for the poorest countries in the world who suffer from abuse orchestrated through structures similar to those this band uses.
Candidly ‘The Edge’ looks like he’s fallen over it. And if he’s so tetchy maybe he needs to ask why that’s the case. Has his conscience been pricked after all?
From the Belfast Telegraph this morning:
The debate on whether Northern Ireland would benefit from a reduction in the rate of corporation tax has been one-sided.
The virtual monopoly in the media for the proponents of a reduction in corporation tax raises questions about the objectivity and neutrality of the media in Northern Ireland and whether the public are well-served by what can only be described as a partisan approach in favour of the influential pro-business lobby.
The case against a reduction in corporation tax is well-articulated, but effectively sidelined.
The main critical analysis of the issue is contained in the publication Pot of Gold or Fools Gold, Richard Murphy’s report for the Irish Congress of Trade Unions.
More recently, the Wilberforce Society – a body with no particular axe to grind – has published a report concurring with Murphy.
There has been no intellectual challenge from the pro-business lobby to these critical voices – except that the case for a reduction in this tax is now being nuanced to suggest that, while it may not now be characterised as a silver bullet for our economic ills, it is very much a necessary central plank in the ‘strategy’ to invigorate our local economy.
I think the point in the last paragraph is key: there has been no intellectual response to the challenge I and the Wilberforce Society have raised to this absurd proposal. Mantra seems to be enough.
My fear is that the same will happen in Scotland.
And as Brian Campfield who wrote the article noted:
The former chairperson of the CBI in Northern Ireland, when questioned by Lady Sylvia Hermon at the Northern Ireland affairs committee, admitted there were no guarantees a reduction in corporation tax would create jobs. We are playing roulette with public funds and hoping for a win.
But the hope is against hopeless odds.
So why are we doing this if it is not to provide further subsidy for business owners at cost to everyone else?
According to the Belfast Telegraph:
The Prime Minister has signalled his willingness to consider a corporation tax cut in Northern Ireland
As I have argued time and again this is the triumph of dogma over reason.
The background to my reasoning is in the paper I wrote for the TUC and Irish Congress of Trade Unions, here. The reasons for objecting are numerous. Let me highlight just three.
First, the chance that such a tax rate could be introduced in Northern Ireland without falling foul of EU law is remote in the extreme. And if it proved to be illegal the damage to the Northern Ireland economy as a result of the consequent uncertainty could be considerable.
Second, the Republic’s low tax offering is not just a low tax rate – it’s also a low tax base. The tax collected by any state is the tax base multiplied by the tax rate – and because both are low in the Republic then many companies operate there and pay little or no tax at all. This is something Northern Ireland could not emulate unless it were, in effect, to cede from the UK for tax purposes.
But doing that would have massive implications. First, the rest of the UK would then need to put up massive tax barriers to trade with Northern Ireland to prevent artificial tax abuse by companies really located in England, Scotland or Wales, That would be enormously harmful in terms of administrative burden to doing trade with Northern Ireland. And second, if it is assumed that the reduced tax rate will bring in increased taxes in Northern Ireland (and those proposing this idea seem to think that it will – although there is no evidence at all that the Laffer curve on which they base this idea actually exists) then that assumed increase in tax revenue has to be deducted from the subsidy now given to Northern Ireland so that it does not get a double dose of regional aid under EU law. The risk is that if the assumption of increased tax is wrong – as I think not just likely but absolutely certain if the Republic’s experience is copied – then the funds available for public services in Northern Ireland will be cut severely. As a result this folly, promoted by the tax accountants of Northern Ireland for the benefit of their clients will impose real and lasting cost on ordinary people throughout Northern Ireland. And that’s a risk no one should take.
Which is why I and the trade union movement on both sides of the Irish Sea oppose this move.
And almost certainly why Cameron supports it.
I know I keep blogging about the folly of Northern Ireland wanting to cut its corporation tax rate of 12.5%, but I admit that I have a preference for being wise before the event, and this is a policy that is bound to go wrong for reasons that I’ve explained here.
It is good to see however that I (and the ICTU and TUC) are not alone in this opinion. I’d warmly recommend a report from Mike Tomlinson and Grace Kelly from the Poverty and Social Exclusion in the UK Northern Ireland research team, based at Queen’s University, Belfast, which comes to the same conclusion considerably more eruditely than I might have done.
As they conclude:
The main debate over economic strategy has been about lowering the rate of Corporation Tax. Our consideration of this issue concludes that to cut the rate to 12.5 per cent would be a poor use of £280 million per annum with little certainty of significant job creation.
Absolutely.
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