Corporation Tax in Northern Ireland

Further written evidence from Peninsula Hi-Tech Ltd

I note John Simpson, Economist, is giving his opinion on Corporation Tax. I know from his Belfast Telegraph articles that he is against a reduction in tax because he fails to know how to replace £200m of tax when he should be looking to create billions of FDI jobs.

In the Republic of Ireland in 2010 over 70 FDI companies are expanding investment and employment in 2010. I enclose some information extracted from an article written by Dr Paul Duffy, Manufacturing Vice President of Pfizer for Ireland, Canada, Belgium and Singapore. He states that FDI manufacturing spends €25bn every year in the economy of the Republic giving 313,000 people work in manufacturing. Output increased by 12% to September 2010 with total exports of £40.4bn for the 3rd quarter of 2010 with a forecast of total exports of €158.9bn or growth increase of 5.8% over 2009. Here in N.Ireland manufacturing is declining year on year.

Ireland ranks as the number 1 global destination for jobs by inward investment per capita according to IBM’s global location trends report. Ireland is ahead of the other FDI locations including Singapore, Hungary and the Czech Republic. US investment has 600 US companies generating $165billion and creating over 100,000 jobs. Trade between Republic of Ireland and US is worth €27bn in the ICT sector. Ireland has 7 of the world’s top 10 companies, 16 of the world’s top pharmaceutical companies and 140 companies in the medical devices sector. The multinational sector is generating jobs, it accounts for €19bn in direct expenditure and €7bn in payroll costs as well as contributing 55% of all corporation tax taken in the Irish economy. FDI has proven in the worst global recession since 1929 to remain central to creating and increasing jobs throughout 2009/2010.

Mr Simpson’s desire to keep the public sector buoyant is now at the expense of the private sector jobs and companies like Peninsula Hi-Tech Ltd, builders of the ICT infrastructure in N.Ireland since 1987. Peninsula has hundreds of thousands of high tech space vacant and is being forced by law to pay rates on empty buildings that should be occupied with over 2,000 employees. There is no business rationale to Mr Simpson’s view that protecting the public purse by robbing the private pocket will maintain jobs, quite the contrary, private jobs continue to dwindle against the high cost N.Ireland public sector revenue demanding model.

To create a real economy and compete for FDI Invest N.I. know and accept they are unable to match the incentives across the border. This is not Invest N.I’s fault but the fault of the politician who allows the unjust hurdle of taxation to blight N.Ireland to the detriment of its people and economy and allows the Republic of Ireland to set the FDI location agenda.

It is long past the time for Northern Ireland to wake up to economic reality in the global market place that now exists. The Republic of Ireland was economically a basket case in 1987 when I commenced privately developing the USTP www.ulstersciencepark.com the South’s financial troubles are banking, property and construction related. FDI past and continuing investment continues to prosper; here in N.Ireland we need to know and understand who our competitor is and to see that we give them the competition for jobs that the Republic still manages to secure to their benefit and our loss.

24 November 2010