Investment Newsletter Find Me A Terrorist That Cares About Tax Rates And I’ll Show You...

April 27, 2011 - PRLog -- Bloomberg ran a piece recently:

“Northern Irish Tax Cut Would Help Beat Terrorism.”

A quote attributed to Owen Paterson, the secretary of state in the British government who is responsible for Northern Ireland.

“We need to do something really radical to help revive the economy”, he states (no sh*t Sherlock). Better economic prospects would “take away any incentive for people to join” dissidents (meaning the dissident republican terrorist organizations that have chosen to reject the Peace Initiatives that have been sporadically active and recently with more frequency).

I gave these comments a moment’s thought, and then quickly filed them into my increasingly bulging file marked ‘political huff and bluster’.

Paterson is making these broad brush statements because there are local elections coming up in Northern Ireland, and it’s something to say. Politicians always have something to say. The ‘say’ is an essential job requirement – the ‘do’ is optional. In my cynical opinion, when a new incoming UK government appoints a secretary to Northern Ireland, it is viewed as the ‘dirty end of the stick’, the portfolio no one wants.

Northern Ireland. Yuck. Only trouble.

However if you take up the challenge, ruffle as few feathers as possible, create a few initiatives that ‘bridge the sectarian divide’ then you might just get rewarded with a nice number when you head back to Westminster – maybe Home Secretary, maybe Foreign Secretary.

It reminds me of the time an old boss of mine in the City was offered the position of head of a new Istanbul office. He said he needed it like he needed a hole in the head, but it if he could get through it and keep his bib clean, cut a few costs, close a couple of big ticket deals, in three years he could return to take up a juicy number, a fatter bonus and a nice new title in London. And that’s exactly what happened.

So our friend Mr. Paterson in the Northern Ireland outpost talks about cutting the tax rate from 28% to 12.5%, but do you honestly think that back in the real world David Cameron is going to let that happen?

He has just lent £8 billion to his bankrupt Republic of Ireland colleagues to the absolute horror and disgust of his public, he has just shafted the entire student population of the UK with cutbacks, and there are hoards of lobby groups, unions and the disaffected arguing over who gets to demonstrate in the streets on what dates.

And he is already propping up the entire Northern Ireland economy with a Westminster subsidy the equivalent of 20% of it’s GDP (which is approximately £30 billion). And by cutting his tax take so dramatically, his exchequer receipts for Northern Ireland would reduce so dramatically, how on earth would he foot the bill for his ridiculously enormous and protected public service.

The public sector accounts for 31% of Northern Ireland’s workforce. That is just plain ridiculous. Imagine for every 69 people in the private sector actually attempting to add value to a flagging economy with inventiveness, application and endeavour, there are another 31 public servants walking around aimlessly from water cooler to coffee machine and back, watching the clock, and contemptuously informing people from time to time that they have dialed the wrong number or signed the form in the wrong place.

And Mr. Paterson also thinks that cutting the tax rate will marginalize the terrorist organizations?
Imagine the scene.

An ambitious ‘apprentice terrorists’ comes bounding into the hideout. He’s just read something on Twitter and he is excited:

Chief of Staff: “What do you want, were you followed here, did you follow procedure?”

Apprentice Terrorist: “It’s all fine, safe and no worries boss. But listen I have great news, corporate tax rates are being reduced in order to align with rates in the Republic of Ireland. This is wonderful boss, the war is almost over. We have every chance of gaining meaningful employment through foreign direct investment initiatives and re-settling incoming multinationals. So I won‘t have to smuggle cigarettes, alcohol, fuel or drugs anymore, behind the front of a terrorist organization based pseudo-ideological falsehood of hating the Brits (sure aren‘t we all Europeans now?).”

Chief of Staff: “Right so ACME Inc is going to come here and give you a new job. So do you want to answer phones in a Call Centre and get paid £11,283 net per annum for the pleasure, or do you want to deliver today’s new consignment of illegally imported ciggies from Singapore and I’ll pay you £500 cash for 4 hours work?

Apprentice Terrorist: “I’ll get straight on it boss.”

Once upon a time there were illegal organizations that fought political wars based on real ideologies. There was a time when members joined these organizations to achieve their ideological and nationalistic ambitions. These ambitions were financed through illicit activity.

Nowadays members join these organizations to achieve more immediate ambitions. The money is damn good.

For the time being if you are wishing to make some bang from your investment buck, I’d advise you to steer clear of Northern Ireland, a land with borders, for the time being. Instead let your roving investment eye fall on a place without borders. In investing you only have to be right 51% of the time. Without Borders can do better than that.

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