NI getting closer to matching our corporation tax

bear1

Interesting developments happening with regards to NIs view of changing their corporation tax:

http://www.rte.ie/news/2014/1203/664369-northern-ireland-tax/

If they can all actually agree on how to manage themselves financially then Westminster will allow them to lower the tax to compete with us.
Of course there is a huge string attached:

"Any loss in revenue generated from cutting corporation tax to the 12.5% that operates in the Republic would result in a reduction in Northern Ireland's block grant funding allocation from the treasury."

It seems like it's only a matter of time before NI lower their tax to 12.5% which I believe may cause a slight hiccup to our own economy.
I think giving NI power of lowering the tax could result in huge cuts in public spending.
Also interesting would be Scotlands reaction to it considering they border a region with 21% tax and so they may now have to fight their other neighbour for investment.
Could this be a disaster in the making?

SEPT 23 1989

I think companies would be happier doing business in the Republic

bear1

SEPT 23 1989 wrote: »

I think companies would be happier doing business in the Republic

I'd probably agree, but could the currency be a tipping point for companies to shift North?

BoJack Horseman

It would hurt London more than it would hurt Dublin.

Plus its dependent on the Tories regaining power, so its probably moot.

kowloon

bear1 wrote: »

I'd probably agree, but could the currency be a tipping point for companies to shift North?

I would have thought it would be the opposite way around.

bear1

kowloon wrote: »

I would have thought it would be the opposite way around.

Why? I'm genuinely asking btw.

BoJack Horseman

bear1 wrote: »

Why? I'm genuinely asking btw.

Britain appears desperate to cut itself off from the European common market.

Devolving corpo tax to the little statelet won't make much difference.

Companies will still want access to the EU & its 500m+ consumers or the 300m+ Eurozone consumers.

Britain's desire to withdraw into isolation won't encourage much in the way of firms leaving here to move to NI.

ted1

bear1 wrote: »

I'd probably agree, but could the currency be a tipping point for companies to shift North?

Complete opposite, companies like to use the euro.

anncoates

It would really be 15.5% when you factor in the 3% protection rate.

Robbo

Quick, get John Delorean on the phone before they do.

The One Doctor

There's a lower cost base in the north, this could hurt us badly.

bear1

The One Doctor wrote: »

There's a lower cost base in the north, this could hurt us badly.

I don't think it will affect us hugely, but a hiccup we will feel I'd say.

R P McMurphy

The One Doctor wrote: »

There's a lower cost base in the north, this could hurt us badly.

Is a non runner.

would have to take a hit on the block grant to drop the corporation rate

would have to compensate London for businesses that relocate

the hit to the block grant would not be made up in the short term (15-20 years) by a massive increase in companies paying corporation tax

any increased revenue from greater numbers employed and taxes generated from spin off services would be sent back to London

AndonHandon

I don't see much of an issue with this, not in the short/medium term anyway.

fiachr_a

The One Doctor wrote: »

There's a lower cost base in the north, this could hurt us badly.

And that famous Protestant work ethic.

ScumLord

I think it could help the island as a whole. N.I can do some things better than the republic and it's access to the UK would be beneficial. If N.I can attract corporations into N.I it would make the republic more appealing as the corporations would have easy access to anyone that set up in N.I.

Agent Smith

Its time to invade....

bear1

fiachr_a wrote: »

And that famous Protestant work ethic.

Ah come on, no need for the religion ****e in this thread.

fiachr_a

When the UK quits the EU those companies in NI will move down here.

Galwayguy35

fiachr_a wrote: »

When the UK quits the EU those companies in NI will move down here.

Do you think they will leave?

I would have thought when it comes down to it they would vote to stay, even if it was a by narrow majority, hard to believe they are swallowing Farage's bullsh1t.

Also there would be no more free movement for them.

shampon

A country that is a drain on the resources of The UK exchequer and one which is brought to a standstill over a flag will never be able to compete in the free market.

bear1

Galwayguy35 wrote: »

Do you think they will leave?

I would have thought when it comes down to it they would vote to stay, even if it was a by narrow majority, hard to believe they are swallowing Farage's bullsh1t.

Also there would be no more free movement for them.

I honestly don't think they will. The logistical nightmare it would entail is just the tip of the iceberg.
It will be like Scotland, very close but it will be a no.

RayCon

SEPT 23 1989 wrote: »

I think companies would be happier doing business in the Republic

... and think of the accent.

Grab All Association

Galwayguy35 wrote: »

Do you think they will leave?

I would have thought when it comes down to it they would vote to stay, even if it was a by narrow majority, hard to believe they are swallowing Farage's bullsh1t.

Also there would be no more free movement for them.

London wants to stay in the EU the rest of the country doesn't. They still think its a powerful empire.

Jamie2k9

This will take 3 years to happen and is dependent on talks. It will cost NI 3-400 million out of their block grant and to that into context they were given an extra 100 million funding this/next year. So where will they cut 4 or 500 million from to reduce the tax.

We are still in a good position down here and this will have minimal affect.

By the way I hold next to no confidence that cross party talks will be able to agree on anything so it could be a long time before it given to NI.

bear1

http://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/george-osbornes-autumn-statement-corporation-tax-powers-will-only-be-devolved-to-stormont-depending-on-party-talks-outcome-30795095.html

Sounds like they aren't too confident up there.

Grayson

Northern Ireland is one of the poorer places in the EU. Plus the "communities" are a bit xenophobic. We're not and we attract a lot of people from the EU.

shruikan2553

We have the euro and a larger popilation. Unless you just want a UK base then ROI would still come ahead.

fiachr_a

They mightn't match it, could be less than ours.

The Diabolical Monocle

fiachr_a wrote: »

And that famous Protestant work ethic.

Germany, Europes strongest economy - largest religious demographic - Catholicism 30.8%.

G.B - Catholicism 8.2%


myth - busted.

cookie24

Would these companies prefer to trade in e or £? Surly trading in £ would be a bigger risk? I imagine that would be a big deciding factor.

fiachr_a

Wait for Sinn Féin to get elected next year. They'll cause more damage to our recovering economy than NI's corporation tax will.

padd b1975

RayCon wrote: »

... and think of the accent.

*Healy Rae soundbite*

bear1

Thinking out loud here but if NI did go straight for the 12.5%, would Ireland be able to lower it accordingly?
Say go to 11.5% or would it require EU approval?

kowloon

bear1 wrote: »

Why? I'm genuinely asking btw.

ted1 wrote: »

Complete opposite, companies like to use the euro.

The above answer and also general British hostility to the EU, but I don't know anything about corporate politics.

bear1

bear1 wrote: »

I don't think it will affect us hugely, but a hiccup we will feel I'd say.

Sounds similar to the "soft landing" we were promised by most economic policy "experts" in 2007/8

fiachr_a

fiachr_a wrote: »

Wait for Sinn Féin to get elected next year. They'll cause more damage to our recovering economy than NI's corporation tax will.

How, specifically?

Or are you just being a drama queen with?

bear1

Another interesting article in the Guardian after last nights budget announcement from Osbourne:

http://www.theguardian.com/politics/2014/dec/03/chancellor-tax-raising-powere-northern-ireland-wales

Phoebas

The biggest effect of this would be UK companies already based in Britain relocating to N.I.
That could actually be a win for us.

Kermit.de.frog

Won't happen i'd say. SF don't want cuts to welfare to protect their core benefit claimant vote at the expense of the rest of society.

fiachr_a

NI don't understand that corporation tax isn't the sole reason companies move here. There are lots of other reasons.

Crooked Jack

fiachr_a wrote: »

NI don't understand that corporation tax isn't the sole reason companies move here. There are lots of other reasons.

Absolutely, I see it as a good first step however in bringing both economies into line with each other. With a strenghtening of cross border relations we can start competing for business together rather than against each other. Like I say, it's a first small step but that's what I would see the long term goal being, at least from the SF/SDLP perspective

Magico Gonzalez

fiachr_a wrote: »

NI don't understand that corporation tax isn't the sole reason companies move here. There are lots of other reasons.

True, but NI has one of the lowest age populations in the UK and a lot of graduates passing through the universities there, they also have a lower cost base than the rest of the UK and Ireland. Historically their have been start up cost breaks too.

There are quite a few large financial sector companies (Citibank & Allstate) who have set up shop there.

Rather than looking at it from an adversarial point of view it should be an all Ireland benefit. Companies geographically strengthening their presence in both jurisdictions who will be happy to have a more streamlined cost base.

I dont believe for example the new Citibank centre (dont work for them btw!) threatens the Citibank presence in Dublin, probably see some travel between the 2 sites. The Belfast Dublin corridor is ripe for expansion and development, strengthening of transport links etc for example.

Work together and extract the benefits should be the message rather than us vs them, ...that's definitely not what investors and corporations value.

Crooked Jack

Kermit.de.frog wrote: »

Won't happen i'd say. SF don't want cuts to welfare to protect their core benefit claimant vote at the expense of the rest of society.

Sinn Fein dont want cuts to welfare because there's far more to be made going after rich tax evaders than targeting the weakest in society. I know a party of principle is a strange sight in Ireland these days but there you have it.

Magico Gonzalez

Crooked Jack wrote: »

Sinn Fein dont want cuts to welfare because there's far more to be made going after rich tax evaders than targeting the weakest in society. I know a party of principle is a strange sight in Ireland these days but there you have it.

Wrong thread, but...

You would think a party of principle would do both! Stop wasting the publci money on populist spending measures and ensure corporations pay their way.

Now there is a novel concept !

SF have been given a smaller budget in the north, it's time to demonstrate fiscal responsibility and work with what they have in partnership with the unionists (not easy of course). Tax does not go back to NI executive to spend, but they can implement reforms which allow them to balance that budget.

Is it the right time to spend on an Irish Language Act? If the decision is made to spend there, where do we cut funds from in the north? Health, education, security? IN the context of having a reduced budget I think SF will be pragmatic enough to try and generate more tax revenue through FDI, attracted by corp tax rates. It serves the goal of unity to get workers into the private sector and out of the British public sector (around 60% of total employment, more even!).

How does that stack up against their popularity in the RoI? Not very well I'd argue, they won't win votes with low corp tax rates and increased investment. There are those within the northern party who would lower the welfare spend in the north so as to appear to be a fisally responsible party. That won't play well with their base in the south. Interesting dynamic.

They will have to square that circle.Have they proposed one higher all Ireland rate?

Maybe someone more familiar with their corporate tax policies can tell us what the proposal for both tax regimes are? Given that they acknowledge that until the GFA agreement reaches it logical (in their view) conclusion two jurisdictions will be temporarily necessary?

irishfeen

Great news! and for us too down here - a strong northern Irish economy means strong trade with the south. Also its part of the key elements of having an all-Ireland economy which will be very good for every one of us.

Iwasfrozen

irishfeen wrote: »

Great news! and for us too down here - a strong northern Irish economy means strong trade with the south. Also its part of the key elements of having an all-Ireland economy which will be very good for every one of us.

It's not good for us. Ireland relies heavily on FDI, any FDI competition is very bad.

Galwayguy35

Maybe I'm missing something here but how come Scotland and Wales aren't looking for the same thing?

Crooked Jack

Magico Gonzalez wrote: »

Wrong thread, but...

You would think a party of principle would do both! Stop wasting the publci money on populist spending measures and ensure corporations pay their way.

Now there is a novel concept !

SF have been given a smaller budget in the north, it's time to demonstrate fiscal responsibility and work with what they have in partnership with the unionists (not easy of course). Tax does not go back to NI executive to spend, but they can implement reforms which allow them to balance that budget.

Is it the right time to spend on an Irish Language Act? If the decision is made to spend there, where do we cut funds from in the north? Health, education, security? IN the context of having a reduced budget I think SF will be pragmatic enough to try and generate more tax revenue through FDI, attracted by corp tax rates. It serves the goal of unity to get workers into the private sector and out of the British public sector (around 60% of total employment, more even!).

How does that stack up against their popularity in the RoI? Not very well I'd argue, they won't win votes with low corp tax rates and increased investment. There are those within the northern party who would lower the welfare spend in the north so as to appear to be a fisally responsible party. That won't play well with their base in the south. Interesting dynamic.

They will have to square that circle.Have they proposed one higher all Ireland rate?

Maybe someone more familiar with their corporate tax policies can tell us what the proposal for both tax regimes are? Given that they acknowledge that until the GFA agreement reaches it logical (in their view) conclusion two jurisdictions will be temporarily necessary?

There are a lot of interesting questions there and I suppose we'll just have to wait and see what happens over the coming months and years. As Im not a member of the party I couldnt tell you what their plans are but it's simply not a like for like match to compare north and south when you consider that unionists will oppose and can veto absolutely anything that Sinn Fein support on the basis that Sinn Fein supports it.
I dont think there's anything particularly anti-socialist about lowering corporation tax. The main thing would be to ge these companies to actually pay their tax and install fair practices and wages for their workers, I'd imagine that is the more pressing matter.
As for the Irish language Act I'd consider the time to be long long over due. Such an act would barely put a dent in the budget and would be a wonderful gesture in improving relations and creating a more harmonious working atmosphere, well worth whatever it would cost.
But, like i said, interesting times ahead. I agree wholeheartedly with your central tenet.

Work together and extract the benefits should be the message rather than us vs them

Crooked Jack

Galwayguy35 wrote: »

Maybe I'm missing something here but how come Scotland and Wales aren't looking for the same thing?

If it goes through you can bet your life scotland will be, that's why cameron was so keen to put all this on the back burner til after the referendum. Wales is a little more benign and tied more closely to england

Beasty

There is a way to go before the power to set Corporation Tax rates is devolved. However it's not only the rate that makes Ireland attractive (and indeed some companies are subject to a 25% rate which is higher than the UK) - it's the underlying tax system. There will be no devolution of powers to change the rules. If they do reduce the rate it may encourage one or two companies to try and take advantage of cheap labour in the North, but I am confident it will not result in a wholesale shift of companies to the North.