Major British companies who’ve either already left or are considering abandoning the UK as their headquarters for tax purposes:
Aberdeen Asset Management
Lloyds Brokers
UBM
Brit Insurance
Shire Pharmaceutical
United British Media
Smith and Nephew
All are interested in moving to Dublin.
It’s time to "harmonise" tax-rates across the British Isles, not just Ireland.
This could and should be the Unionist response to the corporate tax question.
11 comments:
All sounds great, but what motivation for the Dublin government to go along with this? Given their whole economic policy is based on low corporation tax, wouldn't it be electoral, and possibly economic, suicide?
If this was the unionist response to the corporate tax question would the southern/nationalist response not be "Aye, dead on." ?
'British Isles"
Awwwww bless!
I doubt that the Irish government would favour too much tax harmonisation across the British Isles for the same reason its not too happy for tax harmonisation across the EU. It would give away part of its edge.
And its not just a matter of tax harmonisation either, there is also the open economy that the Irish government promotes. Its much easier to set up a company in the ROI in then in the UK ( or some im told). The Irish government is much more positive in its response to companies looking to setup in the ROI.
The ROI would have no say in unilateral tax harmonisation. I.e. a cut in UK Corp Tax to match the other state in the British Isles. ;-)
The ROI would have no say in unilateral tax harmonisation.
Sorry, I see what you were referring to now.. I thought that what was being hinted at was tax harmonisation as a local British Isles agreed pact, like a mini agreement within the EU.
As Ive said though, its much more then tax harmonisation
No, sorry, Chekov's got it- I should have made it a bit clearer.
A UK-wide corp tax lowered to the same rate as the ROI is what I'm after- indirect harmonisation if you like!
As Ive said though, its much more then tax harmonisation
With NI's peculiar problems, yes, you're right; regarding the companies I've mentioned the UK/ROI tax differential has been a very big motivating factor in the proposed relocation.
The Republic could of course undercut it again. Congratulations, we're now in a race to the bottom.
The truth is also the UK has far less latitude to cut than the Republic. Higher national debt, different cost versus gain than the Republic.
They can probably do enough to prevent companies moving but I think having a UK wide 12.5% rate is pushing the boundaries of possibility. Unless you are happy to slash the NHS budget at the same time.
If the government decides to cut it today, then any possible drop in revenue resulting wouldn't be realised until 2010 at the earliest.
That's two years in which the positives arising from such a drop would have time to come into play.
Also, it's not a given (if you look at other examples in the EU)that a drop in Corp tax will lead to a corresponding drop in overall govt revenue- but if it doesn't happen, then the leak of both companies and potential tax revenue to the ROI will continue and probably intensify.
But after 2010 we will be looking into very different drivers in both Irish and British economies.
If we look at the present situation, the lower tax rate in Ireland really provides one result: employment. These jobs are based largely on a reliance on the Multi-national sector. The UK companies re-locating to Ireland are not suddenly going to run all mission critical services out of the Republic, what we seeing in reality is a shift in letterhead and admin, not a wholesale abandonment of the UK - where a majority of these companies core markets are.
The reality facing these Islands in terms of economic growth potential are similar. In Ireland, we are moving - being pushed if you will - from a reactive service based with minimal knowledge economy to knowledge and innovation based economy with bespoke service components attached. Hyper-Globalization is producing this. I wager a similar situation is facing the British economy. In this context does Lower Corp. Tax play a role in creating the conditions for change. I would argue that it plays a minimal role in creating conditions for enacting change but allows a market to retain key players that produce employment and make Ireland Inc. look great. The problem is with hyper-globalization those key players are no longer interested in Low Corp Tax if any saving is then absorbed into salary costs.
The real question should be which economy across these two Island's can turn around this change and retain the blue chips?
In that case, I would argue that it's easier to turn a small tug-boat around than a tanker.
You're making the nationalists arguments for them O'Neill!
Companies want to leave UK and go to Ireland because of lower corporation tax. Nationalists want lower corporation tax in Wales and Scotland, UK treasury does not.
I can see the argument now - "After 300 years of the Union, big companies are leaving in droves for independent Ireland - the Union isn't working"
Nationalists want lower corporation tax in Wales and Scotland, UK treasury does not.
Some Unionists also want it for NI; but why limit it to Scotland, wales and NI? A cross-party campaign could put enough pressure on the Uk treasury to reduce it (look at Brown's retreat on other taxation matters). A UK-wide reduction in Corporation tax means we all benefit- a win-win for everyone living in the Uk surely?
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