Colm Heatley has a useful round-up of the outlook at Stormont in the next few months. In particular, he has a scoop on the Varney review:
Sir David Varney, the man appointed by British prime
minister Gordon Brown to head an economic review into the North, will
next month make his findings public. What Varney says will go a long
way to shaping the work and the nature of the Assembly.
question for Varney, at least in the eyes of politicians and
businesspeople in the North, is the rate of corporation tax. Varney has
already ruled out a 12.5 per cent rate, which would have brought the
North in line with the Republic, but sources close to him say he is
poised to recommend a ‘halfway house’ option.
According to the
sources, Varney is considering an option which would allow businesses
registered in the Republic to move some of their operations to the
North and have corporation tax levied at the 12.5 per cent rate.
money would go into the Republic’s coffers, while income tax paid by
the company’s employees would go to the British exchequer. (Sunday Business Post)
The proposal for a 12.5 rate would improve the North’s competitive position as against both Britain and the Republic. Varney’s alternative looks as if it’s designed to allow the North to take jobs and business from the Republic but leave it’s position as against Britain unchanged.
The message is crystal clear. Not for the first time, the British Government is quite happy to allow Ireland to make a substantial new commitment to building up the North’s economy, but it’s not interested in reciprocating.
So will the Irish Government go for it? It has shown a genuine seriousness about the cause of an all-Ireland economy, but this may be a step too far. In the wake of the Shannon episode, there is now much more sensitivity about inter-regional competition on the island of Ireland.
It will be interesting to learn more about these proposals. What would happen to Southern businesses that already have operations in the North? What would the implications be for other businesses?
The big question, however, remains the one I have been banging on about for the past few weeks. How can Gordon Brown justify these limited proposals when the Labour Party is moving towards accepting fiscal devolution for Scotland?