Tuesday, April 24, 2007

Plaid's Economic Red Herring

Has my final business hustings last night, this time organised by the professions group of organisations such as the ACCA, ICAEW and CIM.

Also probably the last time I will see Dafydd Wigley before the Aberconwy results on May 4th, which will have a bearing on both our lives I am sure.

Interesting that no-one decided to discuss the corporation tax issue, which has been at the centre of Plaid's business policies. Indeed, there has been almost no scrutiny of this by political commentators and yet it forms the core of the opposition party's economic policies.

This entire policy is a red herring which is excellent in principle and completely unworkable, for now, in practice.

This is not to say I don't agree with the concept of specific tax cuts in Wales - I am a Conservative after all. Indeed, I raised this issue over two years ago and have already blogged on this subject in February. As I said in a speech to the Cardiff Chamber of Commerce last year

"I believe the time has now come to have an honest debate to thoroughly re-examine the whole issue of the additional powers that can create competitive advantage for Welsh businesses, as opposed to grants that do little to support long term investment. Many would argue that Wales is not mature enough at this stage in the devolution process to consider a radical move in terms of tax-varying powers and their ability to transform our economy. This is no excuse for not having a wider and deeper debate on the effect of further powers on the competitiveness of the Welsh economy".

However, what is disingenuous about this specific policy from Plaid is that it is largely acknowledged that such a policy will be completely unachievable under the next term of the Assembly Government, thanks to the half-baked devolutional arrangements developed by Labour.

The European Commission has made it absolutely clear that only those regions with existing tax varying powers could cut corporation tax. This means that if Wales wants such powers, then we will have to have a full parliament like Scotland after 2011. Indeed, an interesting article from Northern Ireland has made the same case and has shown that within a short period of time, this policy would have a positive fiscal benefit on the region and certainly help to address some of the wider economic disparities within the UK.

Therefore, Plaid's main economic policy is completely unworkable under current devolution arrangements and would not be implemented within the third term of an Assembly.

This is not to say that all parties should not sit down during the next four years and work towards a specific tax reducing policy for the fourth Assembly in 2011 and, more importantly, get the business sector on board for such a policy. I would certainly strongly support such a move if elected as, I am sure, would Dafydd Wigley.

1 comment:

Michael Norton said...

I could have sworn that we did discuss corporation tax and the need for an assembly on scottish lines before being able to undertake such a move but to be fair you were huffing and puffing a bit throughout the meeting Dylan so you may have missed it.

You are a young man with a lot to live for; stop stressing yourself out so much.

To be fair I thought it was a constructive hustings and it cheered me up that we have some candidates that can give you a run for your money when it comes to business.