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Thread: What would a 12.5% Corporation tax rate in the north mean for the south?

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    Default What would a 12.5% Corporation tax rate in the north mean for the south?

    The currency and price of goods and services in northern Ireland mean that workers can be paid much less than the rest of the island without feeling underpaid.

    Northern Ireland has a much higher education standard than the rest of the UK and Belfast is becoming a growing IT hub already, attracting a lot of US FDI.
    The Universities there are taking advantage of this.

    Queen's University Belfast | Press Releases

    "A new 7.5 million international research hub, which will bring major advances in computer hard drives, new and improved sensors and a host of advanced coatings, has opened today at Queen’s University Belfast."


    Economists have long since been arguing that the automatic adoption of taxation policies from Britain are severely damaging the north's ability to attract FDI and that having a much higher corporation tax rate than the rest of the island practically writes it off as a place for investment.

    "Lower corporation tax sees investors head south"

    "The Republic’s low rate of corporation tax may have led to 21 international companies setting up there instead of Northern Ireland."

    Lower corporation tax sees investors head south - Business News, Business - Belfasttelegraph.co.uk

    The Republic of Ireland has been gaining from Northern Ireland's misfortune at having to adopt unsuitable UK economic policy.

    Therefore it is safe to conclude that with all things considered the north actually has stagnant potential that is being wasted.
    The region is therefore finding itself with no other option than to depend on a subsidy from Britain as a replacement for being able to create it's own successful economy

    The extent to the north's potential has been raised by senior economists, accountants and business leaders who have concluded that dropping the rate of corporation tax would create an immense amount of employment, at least 90,000 new jobs.

    Tax cut 'could create 90,000 jobs' - National News, Breaking News - Enniscourthyguardian.ie

    Dropping the rate of corporation tax has been supported by ALL main political parties in the north but has been constantly rejected by the British government.

    However there are signs that things might be changing.

    Shadow Northern Ireland secretary Owen Paterson welcomed the report, saying: "They make a very coherent case for a reduced rate of corporation tax in Northern Ireland."

    With the completion of the Titanic Quarter and a possible levelling of corporation tax across the island, what would this mean for the south considering the fact that the higher rate of corporation tax has been sending FDI south?

    Could the north become a real danger to the Republics Economy in the future and attract investment away from the south, considering the north has a highly educated low paid workforce which could appeal more to the pockets of business investors?

    Is the potential for an emerging economy in the north a threat or will it have a positive knock on effect?

    Last edited by st333ve; 2nd August 2010 at 04:44 PM.

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    Cool

    It might divert some FDI from here for sure, but I don't think it will happen.

    Dropping the rate of corporation tax has been supported by ALL main political parties in the north but has been constantly rejected by the British government.
    I can't see Westminster going for it, because the Scots (at least) would most likely want to do the same.

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    Different government this time around remember, and they have shown interest in this.
    Labour flat out rejected it, it remains to be rejected by the Tory's who seem to actually be leaning towards favouring it.

    It's a disgrace that the 100% mandate from political parties and support for this from the business leaders and economists has been flippantly disregarded so easily in the past.
    This does expose the true lack of powers the Stormont council actually has.

    It's true that the real reason behind the opposition could actually have more to do with Scotland than here, allowing more control over economic powers here and a successful impact could be just the right kind of economic evidence Scottish Nationalists need to push for independence and it could make a huge difference to their cause - Something a pro-Union British government would obviously never want.
    Last edited by st333ve; 2nd August 2010 at 04:52 PM.

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    I think it would mean Armageddon for FDI in the republic. Foreign investors are already being driven away by our ridiculously high costs.

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    Quote Originally Posted by reknaw View Post
    I can't see Westminster going for it, because the Scots (at least) would most likely want to do the same.
    If they do it they'll do it for all of the UK as well as NI.

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    Hyper capitalism must die. Higher rates of corporation tax is one of the weapons to kill it.

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    Quote Originally Posted by Tigris Celtica View Post
    If they do it they'll do it for all of the UK as well as NI.
    I don't think so.
    Lower England can still attract massive investment and the government will not want to lose the large revenue from corporation tax , especially when it sees no reason for lowering it in England.

    Also the unsuitable economic policies here which hamper the economy, send the more educated students from here to England via the 'brain drain'.

    It might suit Britain to hand out a subsidy here instead, at the expense of our wider society.

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    Remember that corp tax is only one of a range of things.

    The average standard of education is much better in the 26 counties and that is more important.

    The 6 counties have low educational outturns, on average, and it will take decades to reverse that!

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    Quote Originally Posted by st333ve View Post
    I don't think so.
    Lower England can still attract massive investment and the government will not want to lose the large revenue from corporation tax , especially when it sees no reason for lowering it in England.
    Interesting thread!

    Heathrow and the City offer compelling reasons in and of themselves for FDI south of the Wash. The North needs some incentive additional to its low cost base to generate much greater private sector activity. This can be done through grants etc (as has been the case for years) or reduced taxation.

    Personally, I believe there will be a lower rate in the North than rest of UK. I believe the objective is to compete with ROI for FDI and not the rest of the UK.

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    Quote Originally Posted by factual View Post
    Remember that corp tax is only one of a range of things.

    The average standard of education is much better in the 26 counties and that is more important.

    The 6 counties have low educational outturns, on average, and it will take decades to reverse that!
    Totally untrue.

    Please provide details.

    I believe you are speaking from your own stereotype and not fact.

    With the different examinations I am unaware if the north has a higer education standard then the south, that's why I stated it has a high education standard which it certainly does....

    "Record breaking results"

    Northern Ireland's students are still the best G.C.S.E performers, with 75.1% of entries gaining A* to C grades and 27.1% gaining As or A*s.
    http://news.bbc.co.uk/1/hi/education/8223855.stm

    "NI pupils tops UK for A-levels "
    http://news.bbc.co.uk/1/hi/northern_ireland/3148785.stm

    http://www.belfasttelegraph.co.uk/ne...-14113016.html
    Northern Ireland's universities 'world leading'

    I seriously doubt that education would stand in the way of investment if Corp tax was reduced.
    As many professional economists have stated, it is simple mathematics.
    Businesses go where they can maximise profit, the south is cheaper it's that simple.
    If the south lost this advantage then it could very well lose a lot of FDI.
    Last edited by st333ve; 2nd August 2010 at 05:09 PM.

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