Sinn Féin has made great play of the impact this will have in “harmonising tax” on an all-island basis and present it as another stepping-stone to Irish unity. The capitalists argue that reducing corporation tax will bring about increased investment. The CBI who have lobbied continuously for this measure argue that a 10% reduction in business tax will result in a 60% increase in US investment and that for every 1% decrease in business taxes there will be a 1% increase in employment.
These figures have been generated on analyses based on the UK and on the assumption of rapid global economic expansion. However the reality is that US foreign direct investment has dried up; there is a strike of capital on a global scale as trillions of dollars remains on the sidelines of production.
Any reduction in tax revenue associated with business taxes will be at the cost of an equal reduction in public expenditure. Estimates of the cost involved vary (as these have not been made public) but £250 million to £300 million is thought to be likely. This will have to be achieved on top of the £4 billion of cuts made by the Assembly.
This is not directed at those smaller businesses struggling to break even (for whom a reduction in tax on profits is largely irrelevant); instead it amounts to a highly regressive subvention to large business profit levels. Contrary to the capitalist propaganda, reducing corporate tax levels will not attract increased US investment as US capital is retrenching not expanding; any investment coming out of the US will go to more profitable, low-cost competitors such as those in south-east Asia. However it is clear that applying a further £300 million of cuts to the public sector will further decimate our economy resulting in at least 7,500 lost public sector jobs and approximately 20,000 job losses throughout an economy largely dependent on public sector demand.
Far from supporting the growth of the economy, a reduction in corporate tax levels will actually result in a further deterioration in the northern economy, more unemployment and even more serious cuts to public services. The only ones who will be happy will be big financial institutions who will redirect an element of their operations to locate in Northern Ireland and avail of low-tax levels.