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July 18th, 2006
Mixed Blessings
A Tale of Two Economies: Ulster Tiger Ready to Spring?

A computer-generated design released on July, 2005, details the $1.75 billion plan for the revitalization of the Titanic Quarter in Belfast, Northern Ireland. Under the plan, the old shipyards will be redeveloped into apartments and offices.

Credit: REUTERS/Titanic Quarter Ltd.

Taxing Dilemma

Capitalizing on the cease-fire and taking crumbs from the ROI’s overflowing table will not be enough to create an Ulster Tiger. In key areas, such as corporate taxation and government spending, NI has not followed the ROI example. For NI to truly thrive, its bloated government will need to be trimmed, a tough thing to do for squabbling political parties. Furthermore, NI cannot count on additional money pouring in from the UK, the way that ROI benefited from EU subsidies.

Topping the NI list of impediments to competitiveness with the South is the 30 percent corporate tax, a considerable amount compared to the 12.5 percent in the ROI that has garnered so much foreign investment. Sharing a border with a region charging so much less in tax is a huge hindrance to growth in the North and ultimately to an all-island economy, say business and political leaders in NI. Unusually, it is a point that most political parties in the North can agree upon. Unfortunately, as NI remains part of the UK and requires heavy subsidies by taxpayers, demanding a reduction in corporate taxes is tricky. This is especially true because most regions of the UK are worse off than NI.

The much-hoped-for peace dividends have created the opportunity for NI to do something new; the question now remains whether the government has the will and the independence to do it. In the meantime, small businesses and average Irish people are doing what the government may or may not ultimately accomplish: getting down to business.

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