Varney betrays Ireland

What a damp squib.

 After two month’s delay and 130 pages of unconvincing analysis. Sir David Varney (yes he of former Customs and Excise fame) concludes that all a reduced rate of corporation tax for Northern Ireland would do is cost the UK exchequer money.

The Institute of Chartered Accountants are spot on the money in my books when they say:

 The report seems to operate on the premise that there is no case for differential tax policies in Northern Ireland, and indeed concludes in this way.  Nevertheless, a second review is now promised which is to look at incentives for supporting the sustainable growth of businesses, investment and employment in Northern Ireland.

 The overwhelming focus of the report on rejecting arguments for a 12.5 rate of Corporation Tax for Northern Ireland is inconsistent with the reference framework for the report in the first instance, which was to examine how current and future tax policy, including the tax changes announced in the Budget 2007, can support the sustainable growth of businesses and long-term investment in Northern Ireland.

 What is really needed is a coherent policy to influence earning patterns – the generation of profits by businesses in Northern Ireland.  Surely this could have been achieved in Sir David’s initial review, without the requirement to promise a second study.

In Ireland we often hear of Perfidious Albion. Today its not just that you cannot trust our big neighbours but that they have lost the ability to see beyond their own noses and look at the experience of attractive corporation tax rates internationally. The report talks again and again about how a lower rate would affect the UK. He should be honest and say that what he means is that it might affect the South East of England. If I were in Liverpool or Newcastle, or even worse in Scotland or Wales I would be equally appalled at his shallow narrow mindedness.   

Sir David says a reduced rate would cost the UK £2.2bn (over a decade). This is true if you believe that a reduced rate would no have impact on the economy, that it would fail to attract Foreign Direct Investment and that it would not strengthen the business chain. All things it has been proven to do in the Republic of Ireland where rather the costing the exchequer it has raised the government an awful lot of money. 

I could go on but suffice to say that on page 11 he cites Seagate as a great example of investment here and says they continue to invest in the region. News of the redundancies must not have reached London yet!! I hope the Northern Ireland Affairs launch an urgent inquiry into all this.

By the way, it’s the best argument I have read all year for a United Ireland.