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.
The Stop the Cuts Campaign today submitted it's "rejection of the Assembly Executive's Draft Budget" in a hard-hitting statement which accused the political parties in the Executive of taking "a political decision to stand together with the Tory/Lib Dem coalition government in implementing savage cuts against ordinary people."
As we go to press, the outcome of the general election is very difficult to predict. The Tories are ahead in the polls but their lead is slipping and a clear Tory majority looks increasingly uncertain. The Tories need to climb an electoral mountain to win enough seats to form a majority government. At the present time, opinion polls suggest they may do it but the memory of the Thatcher years has not faded for millions of voters, especially working class voters. Now that the Tories have taken off the mask and appear as they truly are, the outcome of the election is much more uncertain. A certain swing back to Labour, especially amongst working class voters, is clearly discernible.
Tommy Black, Socialist Party candidate for East Belfast, has today hit out at OFMDFM’s decision to provide the Ballymac Plazone childcare scheme with only 3 months of reduced funding.
Following their well-supported two day strike on 8 and 9 March, up to 200,000 civil servants in the PCS union will be on strike again on budget day - Wednesday 24 March. This action is to defend contracts that guarantee a certain level of redundancy pay if civil servants lose their jobs.