NCPA - National Center for Policy Analysis


August 7, 2007

To boost a long-suffering economy, Northern Ireland's new government wants its corporate tax rate slashed to the 12.5 percent levied down south in the fast-growing Republic of Ireland, says the Wall Street Journal.

Yet British Prime Minister Gordon Brown is said to be hesitant to allow tax differentiation within the United Kingdom, favoring pubic spending instead.  According to a study by the Center for Economics and Business Research:

  • Public spending accounted for more than half of Scotland's gross domestic product (GDP), nearly two-thirds of Wales's and some three-quarters of Northern Ireland's.
  • That's far above the 43 percent for all of Britain and money wasted by Westminster.

Pumping more state money into these economically laggard regions is not good policy, says the Journal.  Brown wasn't a renowned tax cutter in his decade at the British Treasury, but using fiscal policy to create growth, rather than continue to restrain it, would be a more effective and less expensive way of helping the other countries in the Kingdom, says the Journal.

Source: Editorial, "Go, Irish," Wall Street Journal, August 7, 2007.

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