THE IDEA OF a separate corporation tax for Northern Ireland has reared its head again. There is no doubt that the area has been, or at least will be, particularly badly affected by the public sector spending cuts and it is good to see the government dealing with this head on, in this instance by building up the private sector.
But a separate corporation tax? This would be wrong on some many levels. Principally, EU regulations state that any savings made from a lower corporation tax would need to be paid for from that same region. This would be disastrous for the man on the Belfast street. And imagine selling the policy to the electorate – “we’re going to cut your spending and maybe raise your taxes because we want to cut the taxes of multinational companies in the hope more of them will base themselves here”.
How could the government then deny corporation tax raising powers for Scotland (and, of course, Wales) with this in place? But that is what they have just done, in Parliament yesterday.
Finally, this would create whole new problems for the taxman – chiefly, another long struggle with companies transferring profits but not jobs to the region.
The government line is that this is a region that shares a land border with a state that does have a lower corporation tax. But perhaps the neighbours to the south are not the best example of successful fiscal policy.
It might be best if we don’t try to keep up with the O’Briens this time round.
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