Yes and no, but it’s a different thing

Ireland’s low corporation tax rate did attract a lot of inward investment and, it’s supporters say, lots of good jobs with American tech firms. They would argue that for a small nation this is necessary to offset their lack of “industrial heritage”, to allow them to attract a proper share of inward investment. But that was a national policy applied nationwide, and not one we could obviously follow. An economy of our size would be giving away more than it got in tax revenue, and has very different circumstances. Plus it’s a bit of a “beggar thy neighbour” policy that would lead to lots of similar tax cutting (especially if we did it as a larger nation) and shrinking tax receipts all round. There’s a fun afternoon to be has writing down exactly how a Double Irish Dutch Sandwich works though.

These enterprise zones are a different beast to a national tax policy though. Evidence is very patchy in their effectiveness wherever they’ve been used before. Trump did a very similar thing when he became president and there is no evidence it did anything to increase wages/employment or reduce poverty. At least not based on the research I have seen. What it unambiguously did was increase profits for the firms that relocated to them, by reducing tax receipts for the state. That is, the evidence suggests this is a policy that transfers wealth from the tax payer to a small number of company owners. It cannibalises, it doesn’t grow. Similar things have been tried in many places, and generally lead to lower tax receipts, higher profits and s**t jobs.

But maybe Kwasi has it all worked out. Or maybe he doesn’t, and he’s giving a load of our money to his mates. Who knows.

Posted By: Under soil heating on September 19th 2022 at 14:57:19

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