Will Brown give Northern Ireland a Corporation Tax cut?

One interesting feature of the St Andrews Agreement is the commitment that Gordon Brown will "meet all parties to consider proposals – including those from the Assembly subgroup on economic challenges facing Northern Ireland – that make the most of new opportunities arising from greater peace and stability."

Although there is no mention of it in the document, there are suggestions this could include a cut in the rate of corporation tax for Northern Ireland.

A review of corporation tax, with the possibility of harmonising it with the 12.5 per cent rate in the Republic, will also take place. Somewhat ironically, this cross-border harmonisation was a DUP demand….

…In recent weeks, the DUP has been under increasing pressure from the business community in the North to make a deal with Sinn Fein.

Businesspeople from unionist backgrounds have emphasised the need for political stability if the North is not to be left behind as an economic backwater.

Significantly, of all the political parties, the DUP argued hardest for a reduction in corporation tax. The argument of the pragmatic wing of the party – that opposition to political progress can’t exist perpetually – appears to have won out. (Sunday Business  Post)

The Belfast Telegraph’s campaign for a cut has been backed by all the main parties in the North, and there has also been a favourable hint from Bertie Ahern:

"I think the Chancellor has listened to the arguments on that (corporation tax cuts) and these are fiscal issues that the British Government has to look at.

"Certainly corporation tax, the education system and the regulatory system are all issues that help foreign direct investment. The Chancellor has heard the arguments and I don’t really know what the Exchequer will finally do on these things.

"But there are benefits from an attractive corporation tax." (Belfast Telegraph)

This issue presents an interesting dilemma for Brown. While Northern Ireland may be a special case, because of its historic problems and its land border with the Republic, a corporation tax cut would set a precedent that would undoubtedly have an impact in Britain, especially if it were to prove successful in boosting the North’s economy.

It would certainly feed into the growing debate in Scotland about the need for fiscal autonomy or independence and the desirability of following the Irish model. It might also contribute to English resentment about the higher level of public spending in the Celtic countries of the UK.

Both of these issues are potentially dangerous for Brown as a Prime Minister-in-waiting with a Scottish constituency. He also has to consider pressure to cut the general UK rate of corporation tax.

A specific cut for Northern Ireland could be a tough sell. Then again if Paisley and Adams can agree on the issue, who knows what’s possible.







Leave a Reply

Your email address will not be published. Required fields are marked *