The "last whiparound supper" in Manchester fails to presage the crucifying of the real thief in our midst.!
"The CBI said that a major unnamed US investment bank was relocating its European banking headquarters to Dublin. A major British retail bank made it known that it believes the British tax regime is no longer competitive and is considering relocating its global headquarters.
It is rumoured in London business circles that the British bank in question is HSBC. It has already moved some of its backroom operations to Dublin earlier this year, at a ceremony attended by Taoiseach Bertie Ahern.
The rumour was fuelled after Chris Spooner, head of financial planning and tax with HSBC, told a conference in Britain last month that the bank could save as much as stg£400 million by locating its global headquarters outside Britain. He also disclosed that the bank has been approached by a number of low-cost tax jurisdictions.
The CBI fears that foreign-owned companies may be less inclined to retain their British tax domicile when neighbouring EU states offer more competitive tax regimes.
It notes that smaller, more tax-competitive OECD countries - such as Ireland, Belgium, the Netherlands and Luxembourg - are continuing to gain greater levels of foreign direct investment relative to their economic size.
The inflow of foreign direct investment in Britain accounts for 1.8 times its share of the OECD’s GDP. This compares with 3.6 times for Ireland.
The CBI warns the chancellor that slowing foreign investment in Britain would lead to a loss of economic activity, jobs and the associated tax revenues. And it warns Brown that matters could be about to get worse if research carried out on its behalf by polling organisation Ipsos Mori is anything to go by.
The research found that 37 per cent of big companies in Britain said they would choose to be domiciled in Ireland for tax purposes if they were free to make that choice.
Ireland ranked way ahead of the second-ranked Netherlands, which was favoured by 24 per cent of companies.
The research was based on telephone interviews with 87 chief financial officers from a selection of the top 350 British companies and multinationals based in Britain.
The CBI points out that the average headline rate of corporation tax in OECD countries has fallen from 33.6 per cent to 29 per cent.
This places Britain just above the OECD average, having previously been significantly below it.
‘‘The rise in the British business tax burden has coincided with a period when a number of our competitor economies have taken business tax competitiveness seriously and been reducing corporate taxes. For example, Ireland reduced its corporation tax rate to 12.5 per cent in 2002 from 38.5 per cent in 1996," the CBI said.
The thrust of the CBI argument is that Brown should copy countries such as Ireland by lowering British corporation tax and adopting a much lighter regulatory touch.
The lighter and more responsive Irish regulatory regime is much loved by business people who want quick answers to regulatory and tax planning matters.
But Brown is a Labour Chancellor who relies on the support of the powerful British trade unions. Preliminary indications from the TUC, the trade union umbrella group, are that it would strongly oppose cutting corporation taxes, which it sees as crucial for maintaining important public services in health and education.
The Irish authorities may take some comfort from the fact that our business environment is rated so highly by the CBI and finance directors of leading foreign companies.
The fact that more of these companies appear to be considering moving some of their operations here is also a strong sign that the economy can rely on a continuing stream of foreign direct investment.
However, there are reasons to worry about the prominence given to Ireland’s favourable tax regime in the CBI report. First of all, it is likely that when Brown sees these figures he will ask himself whether he can really afford to slash corporation tax in Northern Ireland if the result is that even larger numbers of jobs move from Britain to Ireland.
The focus on the extent to which Ireland is winning a disproportionate share of foreign direct investment could also anger powerful countries such as France and Germany where corporation taxes are far higher and public services are generally far better. The US will also be wondering whether our low tax regime is costing them dearly.
The disclosure earlier this year that US giant Microsoft had applied to have the two Irish subsidiaries, through which it routes many of its profits, registered as unlimited companies is a sign of how sensitive the issue has become. Unlimited companies do not have to publish full accounts, effectively allowing Microsoft to shield its massive Irish profits from the prying eyes of journalists and the tax authorities after the story of its massive Irish profits was given huge prominence in the Wall Street Journal.
In that regard, two tables in the CBI report really stand out. The first shows that taxes on business profits in Ireland account for 3.6 per cent of GDP compared with 2.9 per cent in Britain and 2.2 per cent in the US. That’s because our lower rate means we attract a relatively high number of companies choosing to pay corporation tax here rather than elsewhere.
The second table shows that Ireland has the ninth lowest effective tax rate on capital (big corporations) of 36 countries surveyed.
Britain ranks 25th, France ranks 29th, the USA ranks 33rd and Germany ranks 34th. The finding prompted the CBI to complain that while Britain had slipped down the corporation tax league table for marginal rates, the underlying loss in overall business tax competitiveness has been more severe."(Sunday Business Post)
The big EU countries and the US cannot afford to move to copy the low-tax and light regulatory regimes favoured by small countries such as Ireland.
The big boys must eventually lean on us to push up our corporation tax rates to level the international playing field.
But for how long.?
Ireland is a hostile aircraft carrier lying off the coast of Europe and threatening the well being of our larger neighbours.
Either way, the real concern is that we are registering on their radar screens as a potential threat to their standards of living. The only question is for how much longer they let us get away with it.