Ben Habib: Westminster tax move will only damage NI economy

With a tax rate double that south of the border, here is how NI will be affected:

First, businesses operating across the island will do whatever they legitimately can to transfer the incurring of costs to NI, so as much as possible of their profits are generated south of the border. With this entirely understandable management of costs will capital be sucked out of NI.

Second, when making decisions about whether to invest north or south of the border, the south will have an inbuilt advantage. All other things being equal, investment will be sucked away from NI.

Third, any businesses considering setting up operations on the island will rarely consider opting for Belfast. Why would they? They could access NI from Dublin and avoid paying at least twice as much in tax. Even British businesses are likely to favour Dublin over Belfast.

To create such a significant tax arbitrage when NI is already suffering the triple adverse consequences of the Protocol, rampant inflation, and rising interest rates is negligent, to put it mildly.

To top it all off, NI has the added burden, when seeking to attract investment, of political instability. The fault for this, as with the tax rate, lies with Westminster and its failure to do away with the Protocol.

Northern Ireland is a deficit economy. It relies on the UK for funding of around £8,300 per head. That is only going to get worse with this new tax regime. In two years when the higher tax rate has wrought its damage and the deficit has ballooned, people will not stop to think long enough to remember who caused it. They will simply chalk it up as another reason not to care for the province.

Sadly, the unionist parties, fully deployed as they are in their necessary fight against the Protocol, will be hard pushed to mount a significant challenge to this vandalising tax increase.

They should be able to take the union for granted. They cannot because we have a political class in Westminster who seemingly fear the EU more than they care for the fabric of the country. On the shoulders of unionist politicians in NI therefore falls the burden of protecting their union with Great Britain.

Instead of their being able to plan and paint a bright future for Northern Ireland, they are stuck in the trenches, helmets on and rifles in hand, fighting an existential threat. This pervades their politics and the electorate’s view of them. Unionist parties are not regarded as forward looking and optimistic because, through no fault of their own, they are besieged. A siege which can only be lifted by central government.

Sir Jeffrey Donaldson is in the crosshairs for refusing to re-form Stormont. He is accused of fearing to serve as second minister to Michelle O’Neil. Nothing could be further from the truth. He made it clear in September 2021, if Westminster did not act on the Protocol, the DUP would walk out of the Executive. If anything, he was slow to act.

Rather than being able to contest the May elections with an optimistic vision for Northern Ireland, the DUP and TUV had to don their hard hats and fight it on an anti-Protocol ticket. A gloomy one issue campaign.

This is a tragedy. The DUP is much better placed and inclined to deliver for NI than Sinn Fein. They know the best way to assure NI’s union with GB is by the province’s prosperity. And they know how to do it, with lower taxes, investment in key infrastructure, the creation of free investment zones and a deregulation of the planning process, amongst other things. They are robbed of the opportunity to make the case for these initiatives because they are forced to fight for their country’s existence.

Sinn Fein is revelling in the chaos created by the Protocol. Whatever they may say, they want a weak dysfunctional NI. It aids their aim of laying claim to it. They champion the Protocol and make no argument about Sunak’s higher taxes because they know both these damage the province.

They have the cheek to beat a faux drum of democracy whilst hypocritically promoting the Protocol, foisted on Northern Ireland without any democratic legitimacy. Indeed, the Protocol could never be democratic. Through it, NI is subject to foreign laws, adjudicated by a foreign court and in which it has no representation.

No election in Northern Ireland is legitimate for as long as the Protocol exists.

It is Westminster’s repeated failure to protect and promote Northern Ireland’s place in the union that created the downward political and economic spiral. The two are, of course, inextricably linked. And, just as a failure to protect the union caused a spiralling economy, success in protecting it would create a virtuous economic circle.

Next time Steve Baker is looking to apologise to a group of people, I suggest he skips the EU and the Republic. Instead he should seek, on behalf of HMG, forgiveness from the people of Northern Ireland.