Thursday, November 16, 2006

Cross-border harmonisation of corporation tax rates on the island of Ireland

Cross-border harmonisation of corporation tax rates on the island of Ireland
It's one of the few things Sinn Féin and the DUP agree on and speculation about this has been mounting for a few months now. It's been discussed in various blogs, including the Green Ribbon and the story even made it to the front page of yesterday's Financial Times. A report just published by the Economic Research Institute for Northern Ireland weighing in at 89 pages and liberally sprinkled with tables and diagrams recommends reducing the UK corporation tax rate of 37% in Northern Ireland to a figure more in line with that of the 12.5% rate in the Republic. The desired outcome would apparently be greater inward investment in NI, which currently has an economy excessively dependent on the public sector, so that companies would be able to compete on a more level playing field with their counterparts south of the border.
Halving the current rate of 37% would, according to the report bring about new investment in the region's economy so that NI would reach the "break even" point in tax terms by 2013. The report also forecasts an additional 184,000 jobs by 2030 under the proposed regime. So apparently making a special tax case for the region will bring "real and lasting benefits fore the NI economy", significantly reducing the productivity and prosperity gap with the UK.

It's certainly a strong case, but the question is whether the Chancellor Gordon Brown will allow for such a concession. There could easily be a backlash with Scotland and Wales demanding parity of esteem. So like the famous Goats Don't Shave song "Las Vegas in the Hills of Donegal", in the meantime we can dream of having Silicon Valley in the Glenelly Valley.

1 comment:

beano said...

Which part of "The EU won't allow it" or "It's against EU rules" do people not understand?