Conal McFeely, the Development Executive of Creggan Enterprises in Derry, remains to be convinced that the proposed devolving of corporate tax powers to the Northern Ireland Assembly is a good thing.

The scramble by so-called business champions and politicians to support a reduction in our corporation tax to be brought in line with the rate in the Republic of Ireland should come with a very serious health warning.

The argument being peddled for reducing the business taxation rate from its 28 per cent rate to mirror the 12.5 per cent rate of the Republic is to allow us to be ‘more competitive’ so we can attract Foreign Direct Investment (FDI).

 Today – wherever we live on the globe – we’re all suffering from the fall-out from the financial crisis, caused by those who put profit and greed before the common good.

 Lowering corporation tax is being sold as a silver bullet – to keep us “competitive” and smooth the pathway towards greater FDI investment and “50,000” jobs. However, trade unions are convinced that there will be a loss of 16,000 jobs in the public sector here to finance the reduction of the tax.

 Furthermore, evidence suggests that the mantle of competitiveness, whether it’s in business, in education, in the community, or indeed in ordinary everyday life, that we must be competitive has failed society.

 I would argue that reduction in our corporation tax, and the manner which competition is being sold to us as the key to a more productive and wealthier economy, needs to be challenged as it is not in the interest of people most impacted by austerity, nor in the best interest of our local economy. If lower corporation tax is secured we will see a further widening chasm between the haves and the have-nots.

 Our politicians should not be fooled by the Tories or George Osborne. They should instead be striving for alternative strategies to tackle the effects of the devastation caused by the private sector notion of competition and providing a tax break for multinational corporations, which have caused so much economic devastation to our economy through increased poverty and unemployment.

 A more important step forward for our local economy would be a meaningful strategy for a more mixed and balanced approach for economic development to assist economic restructuring, regeneration and employment creation in areas of greatest need. This should include measures to create community investment, building skills within the communities, and greater support for indigenous and social economy enterprises.

A substantial capital investment programme should be our politician starting point. It should use this spending to target areas that have woeful infrastructural deficits, especially in the west.

 There are more realistic economic measures to stimulate the economy other than lowering corporation tax. Now is the moment to build an enabling economic framework with a different approach to renewal and revival to create hope that change is possible.

The Derry and Northwest experience has shown how self-help projects, credit unions, housing associations and the social economy was the key to rebuilding and reviving the city’s wellbeing out of the fallout caused to the destruction of the local economy due to fickle nature so called FDI. Let’s remind ourselves of the massive tax breaks and incentives to FDI companies such as:

Birmingham Sound Recorders (BSR), Essex International, Coates Viyella United Technologies Automotive, AVX, Courtaulds, Fruit of the Loom, to name but a few. Where are they now – and where are there jobs?

 Cutting corporation tax is not the way forward. Richard Murphy of Tax Research UK, in a report, called ‘Pot of Gold or Fools’ Gold’, dramatically showed how the FDI in the Republic actually started to fall after the introduction of the 12.5% rate in 2003. What did increase was portfolio investment into the International Financial Services Centre, which made millions for investors but did not create anything like the number of jobs one would expect given such huge sums.

 Alongside the 12.5% rate in Corporation Tax, the Republic of Ireland has no controlled foreign company laws or thin capitalisation rules, a relaxed approach to the taxing of foreign dividends and to transfer pricing regulation, relatively easily achieved corporate secrecy, and (crucially) membership of the Euro to add to its appeal.

 “Northern Ireland will not be able to match any of these arrangements meaning that, tax collected in Northern Ireland will always be higher than tax collected in the Republic of Ireland on identical commercial operations even if the tax rate is equalised. Indeed, if, as is the case for many companies the Republic actually offers the chance to pay almost no tax at all then no tax rate that Northern Ireland can now offer can out-do the offering that the Republic currently makes available. Put another way, Northern Ireland cannot compete with the Republic of Ireland on tax and win: that is just not possible.”

 Taxes should be used for social purposes. The big questions we should be asking ourselves about corporation tax are these: Do you use taxation to increase equality or inequality? Can society here afford the loss of £400m from the Block Grant on the gamble to lower corporation tax? And why would anyone want to invest within the “UK” when the government is considering removing itself from the biggest local marketplace – i.e. the European Union.

 Finally, Derry politicians need to ask themselves how many of the new “50,000” jobs are going to come to the city, and whether these will be on top of the “10,000” we are promised under the One Plan.

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