A Letter from Ireland
a Chara,
The Executive and Assembly in the North face and ongoing issue of drafting their budget. In any government, there is a normal tension between tax and spend in sovereign parliaments. In the North of Ireland, the Assembly is not a fully sovereign parliament. It is a devolved administration of Westminster. It is the government in London which sets the tax and benefit rates, collects the revenue, and allocates a budget to the North.
The North has only control over a local property tax and can introduce new and novel taxes, such as a plastic bag tax. The revenues from all other taxes, such as corporation and employment taxes, go straight to London.
The British Government have never fully opened the books on the tax take in the North. Many of the large employers and businesses are headquartered and pay their taxes in Britain. We do know that the North operates a deficit; however, there is a debate amongst economists on the scale of it, with estimates ranging from €1.75 billion to €10 billion. All of this argues for greater transparency from the British.
Underlying this discussion, is the economic cost of partition.
When Ireland was partitioned, the six North-East counties that stayed under British control were the economic drivers of Ireland with strong industrial, agricultural and financial sectors. Belfast was a bigger city than Dublin. At the time of partition, the six counties paid more into the British exchequer (Treasury) than they received. The North was operating with a significant surplus.
Within ten years, that had changed. The north would continue to run a deficit up to the present. There was a decline in traditional industries. Not surprisingly, British Ministers promoted economic investments in their constituencies in Britain. They got no votes for them in the north.
Traders were cut off from their immediate markets in the rest of Ireland. Unionist ministers, who supported partition, got comfortable drawing a cheque from London and looked after their own while the economy flatlined. There was no incentive to grow the economy, as any additional tax raised went to London. We are now at the absurd point that one unionist claim against Unity is that the rest of the island cannot afford to maintain the North!
Partition has done real and lasting damage to the economy in North, across the border counties, and throughout the Island. It has disrupted infrastructure investments, workforce planning, and skills development. While partition remains, the North and the rest of the Island cannot meet its economic potential. The loss of opportunity costs mounts with every year of partition.
There will be front-end costs in the work of creating a new and united Ireland, but over the lifetime of a nation, these are minimal. Economists may speculate on costs, but none have ever made an economic case for continued partition.
Britain still controls the purse strings, and public services are being undermined. The economy in the North fails well below that of the South in all indicators. The economic cost of partition has been great and is still being paid.
Have a great weekend,
