The increasingly polarised nature of the welfare reform debate is an apt demonstration of how Sinn Féin’s electoral success presents an opportunity and a problem for the party. By adopting an austerity-critical approach in the South, it has managed to capitalise on working-class disenchantment with a toothless Labour Party and emerge, along with socialists and independents in the Dáil, as the most vocal opponents of Fine Gael’s class war. At the same time, there is pressure on the northern Executive to introduce Tory cuts in the manner of a regional council. It is widely believed that, with the support of senior figures such as Alex Maskey and Eoin Ó Broin, Gerry Adams intervened to ensure that his colleagues in the North reversed an earlier decision to endorse parts of the Welfare Reform Bill. Various media reports suggest that this is the reason for Leo Green’s acrimonious departure from Stormont, where he held the position of key Sinn Féin strategist. Since then, Adams has come out definitively against welfare cuts, asserting that the republican movement’s natural inclination is to resist the Tory administration’s ‘attack on the most vulnerable, the sick, the disabled, those out of work because of Westminster’s policies, and those on low incomes’. He has rejected accusations that this newfound opposition to welfare cuts is motivated by populism and political expediency, insisting that the 2016 general elections do not factor into the equation. The problem with this is that Sinn Féin’s record as the DUP’s coalition partner calls into question its ideological commitment to anti-austerity politics and to challenging the neoliberal consensus. As the responsible party of government, Sinn Féin has overseen the closure of Belfast City Hospital A&E, the introduction of vampiric PFI/PPP schemes, the installation of water meters in new-build homes, and voted in favour of the Public Sector Pensions Bill as well as the June monitoring round, which took £77.9m out of the Executive’s annual budget. Radical alternatives, for example presenting an illegal budget or withdrawing from the Executive and joining the labour movement in protesting against all Tory cuts, appear to have been discounted at this stage. Progressive taxation is a cornerstone of Sinn Féin thinking in the South, featuring heavily in alternative budget submissions and election manifestos. However, the policy of seeking ‘a common VAT regime, a harmonised income tax and corporation tax’ lays bare a fundamental contradiction at the heart of its project. Realistically, the only prospect of achieving a ‘harmonised’ corporation tax rate is through the devolution of tax raising powers to Northern Ireland and a levelling down to the headline rate of 12.5 percent paid (in theory) by companies based in the South. There is abundant evidence to suggest that this could be one of the most cataclysmic economic adjustments in Northern Ireland since the ceasefires. To begin with, the respected economist and tax expert Richard Murphy has presented a number of strong objections on behalf of the British Trade Union Congress (TUC) and Irish Congress of Trade Unions (ICTU). First, any attempt to introduce a reduction unilaterally is likely to fall foul of EU legislation. Second, northern policymakers fail to understand that what makes the South such an attractive prospect for ‘investment’ is not necessarily its corporation tax rate, but its relaxed tax regime more generally. This is geared towards the financial sector and enables a number of large multinationals to pay little or no tax. Membership of the Eurozone also provides a gateway to the single European market, which Northern Ireland cannot offer at present. Third, lowering the corporation tax rate necessitates a departure from the UK tax system, which, in the unlikely event that Westminster makes such a concession, could also see the introduction of significant barriers to trade with Britain. Finally, it is estimated that, in addition to the considerable administrative burden that the northern government will inherit, the cost in terms of lost subsidies to match lost tax revenues will amount to something in the region of £300m per annum.
Posted on: Thu, 04 Sep 2014 18:27:31 +0000
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