UK to gain advantage if corporate tax is axed

Date Published: {J}

Well, here comes the cavalry at last. It doesn't mean there are no more bad things to come, but at least they're bad things we largely need to face as opposed to all the ones that were completely unnecessary.

The government says it's not a bailout of course, but the government is so used to lying that it's become an automatic reflex, not so much a strategy as a way of life. They may fool themselves into thinking that they're playing poker with the markets, but by now the markets can tell when their bluffing. Their lips move. Of course it's a bailout – the only question is if its bailout as in boat or bailout as in aeroplane.

There will be some price to be paid though. Conditions. Pickings. Notice how the British government seems downright eager to join in. The prima facie reason is that Ireland is so important a market to the UK that it's worth their while. This is probably true. Look around most supermarkets, more than half the brands on the shelves are British owned. So a lot of that money will go straight back to them. And then it goes back again, because it was only a loan.

But that's just the innocent explanation! The real reason the British want to horn in on the fund is so that they can horn in on the conditions. Particularly, they are out to get our corporate tax regime. Many of our fellow Eurozone members disapprove of it too of course, but the UK competes with us directly in this market. A French company say is probably not going to up sticks and move to an island just for a tax cut, but an American one deciding where to put its European base would once have hardly considered anywhere except London. Not so now.

The UK can't compete on tax rates because they're already dependent on what corporate profits they have. Having bugger all to start with, we can afford to offer an introductory discount. They say it's unfair, but it's one of the few things we are able to do to compensate for the fact that, bluntly, we are the middle of nowhere. The UK is on the High Street of European commerce, an axis that starts around London and stretches in almost a straight line to about Milan. We are down a bog road. If we can't attract business here with lower taxes, then we can't attract much business here.

And remember I speak as someone who believes that we have far too many tax breaks in this country, leading to an absolutely insane and to my mind immoral situation where the very richest can avoid paying any personal tax at all. But I think we just don't have any choice on the corporate rate. Lose it, and we lose one of the key elements the led to genuine (as opposed to speculative) wealth creation in this country.

Do you think Fianna Fáil will manage that, before they are finally dragged away from the political gaming table? It would be a sort of ironic crowning achievement. The Speculators' –formerly the Republican – Party, losing it all to the UK.

We are never going to live this down.