General Election 2017: ‘Tax-Dodging Bill’ and corporation tax powers on the minds of Northern Irish parties
The five main Northern Ireland parties have all now published their manifestos. Recurring big themes in the manifestos are Brexit, welfare and corporation tax. There are 18 Parliamentary constituencies in Northern Ireland. The DUP has the most MPs in the House of Commons in the last session, followed by Sinn Fein (which does not attend) and SDLP.
The Corporation Tax (Northern Ireland) Act 2015 allows for devolution of power to the Northern Ireland Assembly to set a Northern Ireland rate of corporation tax to apply to certain trading income. The UK government will commence the Act and devolution of the power can be completed once the Northern Ireland Executive demonstrates its finances are on a ‘sustainable footing’. The Northern Ireland Executive has committed to setting a rate of 12.5 per cent in April 2018.
In its ‘Standing Strong’ manifesto, the DUP said it wants to make sure Northern Ireland gets the best Brexit deal to ‘deal with the real problems that are faced by people in their everyday lives’. The manifesto reaffirms a pledge to create 50,000 new jobs by 2021. The party says that without devolution, all of the efforts to reduce the rate of Northern Ireland corporation tax will ‘have been for nothing’. Political stability is key to our future economic success, it says. The manifesto calls the TV licence a ‘highly regressive tax’ and said it should be frozen and then cut or abolished.
Tax policies include:
- Increase income tax personal allowance
- Reduce corporation tax to at least 12.5 per cent
- Back UK wide tax policy improvements to encourage economic growth in Northern Ireland
- Support efforts to deliver a better deal for Northern Ireland business from the Apprenticeship Levy
- Maintain Industrial De-Rating and Small Business Rates Relief
- Abolish Air Passenger Duty
- Cut VAT for businesses in the tourism industry
Read the DUP manifesto here.
Sinn Fein manifesto
In its very short manifesto, the party accuses the Tories of pursuing a policy of ‘tax cuts for the rich while the poorest have had their benefits cut’. The manifesto said: “Despite the Tory cuts, Sinn Féin has sought to protect front-line services and to defend the most vulnerable in our society. However, the Tory’s tax and cuts agenda continues to increase poverty and inequality.”
Among the policies in the short document is an end to zero hours contracts.
On Brexit, it seeks Designated Special Status for Northern Ireland which would preserve access to the Single Market and Customs Union and ‘ensure that we retain the Common Travel Area and maintain access to all EU funding streams’. Sinn Fein is after a range of fiscal measures to mitigate the ‘disastrous’ impact of Brexit, including changes to EU fiscal rules, exception to EU State Aid rules, a new Brexit Solidarity Fund and broadening the scope of the Globalisation Adjustment Fund and other funding opportunities.
The party’s manifesto can be read here.
The SDLP supports the devolution of corporation tax but says it is no ‘silver bullet’ for the economy. Its manifesto makes a general point about its fears the ‘balanced budget’ condition laid on it by the Government could be used by Westminster to influence decisions. The party has reiterated its opposition to the ‘welfare cap’ and the restriction of tax credit to the first two children. It wants to ‘curtail’ zero-hours contracts and ‘precarious and capricious’ employment. It says more should be done to tackle tax evasion, although few details are given.
Relevant policies include:
- Qualified support for devolution of corporation tax to Northern Ireland Executive
- Abolish Air Passenger Duty
- Support VAT reduction for tourism industry
- ‘Bespoke status’ for Northern Ireland keeping the whole of the island of Ireland within the European Economic Area and maintaining the Common Travel Area
- Oppose cuts to tax credits and benefits
Read the SDLP’s manifesto here.
There is very little about tax in the UUP manifesto. A section of the manifesto points to its MPs’ achievements since the last general election which include forcing the Government into a U-turn on proposed major cuts to tax credits. In the manifesto launch speech, Ulster Unionist Party Leader, Robin Swann MLA said: “The United Kingdom joined the EEC as one nation and we`ll leave the European Union as one nation. Those who promote ‘special status’ are calling for the break-up of the United Kingdom. It is an attempt by some to create a United Ireland by the back door.” However the party does support maintenance of the Common Travel Area.
When it comes to the Northern Ireland Assembly, the UUP wants a reform to the budgetary process to improve transparency and a statutory obligation to produce a full draft in time to allow full Assembly and public scrutiny. On corporation tax devolution the UUP is supportive and claims it was the first to advocate this. It would like the reduction to be phased in over a period of three to five years. It believes a cut would attract businesses, thereby creating new jobs, with the associated increase in income tax, NICs and VAT payments.
Read the UUP manifesto here.
The cross-community Alliance Party wants to use both taxation and spending cuts as part of any further deficit reduction. International best practice demonstrates that a ratio of 1:2 is preferable and this should be the case for the Northern Ireland budget as well as the UK budget, it says. The party continues to support the devolution of corporation tax but says any decision to lower the levels of corporation tax in Northern Ireland must be accompanied by a ‘clear and sustainable plan’ as to how this would be funded. Alliance remains open to further tax-varying powers. It does not believe that the NI Executive has demonstrated the maturity for these to be devolved at this stage.
Alliance supports a ‘Tax-Dodging Bill’ which would:
- Require foreign companies to pay tax on those profits generated from within the UK
- Review current tax relief schemes to ensure they are meeting their intended purpose and are not being exploited
- Reform rules which allow companies to avoid tax in both the UK and in developing countries
- Improve transparency by opening up companies’ reports into their tax activities to the public
- Strengthen the enforcement of and penalties for tax evasion
- Create a register of beneficial interests for all international companies
Other tax policies include:
- Increase income tax-personal allowance
- Simplification of payment/administration of income tax and national insurance
- Support International Financial Transactions Tax and retaining UK Banking Levy
- Wider VAT exemptions including zero-rating sanitary products and sunscreen, and lower rates for hospitality and housing renovation
- Reduction/abolition of Air Passenger Duty across UK
The Alliance manifesto can be found here.