By Viktor Twinkie
George Bush has announced a $145 billion package of tax reliefs to stimulate the US economy. The plan being to relieve some of the pressures on consumers and generate spending.
(Commissars at Bobballs would increase government spending and plough it into government work programmes – the pay off being that welfare pay outs stay low, and creating income and guaranteed job security for families could offer a more effective spending stimulus. The downside of course being a thoroughly well-squeezed taxpayer and an unpopular governing party in election year.)
The US economy is in the mouth of recession. Forgoing government revenue through tax cuts is no guarantee of anything but greater national debt. Will consumers start spending? And if consumer confidence is low and people have turned to saving, will business owners invest in consumers that are refusing to spend?
Anyhoo, if domestic consumption isn’t looking so good, then international markets will save the day. With a strong housing market you tend to see strong imports, and in a weaker housing market a stronger emphasis on exports. So go manufacturing and exports! Well, not exactly.
So Bush will cut government revenues, increase the national debt and put America further in hock to foreign lenders. If consumers fail to respond the knock on effect could be felt in Asian, then UK markets. America just sneezed again, and people are reacting in the way they’ve always done.
What does this mean for NI? The US is opting to cut taxes, so restrictions are going to be placed on government spending. US officials must be asking themselves – are US tax dollars in NI working for the US taxpayers? Is this the best use of treasury funds during recession?
It seems to Bobballs Commissars that things are getting dicey in the States. If by May the US is dealing with recession, higher inflation, interest rate hikes and job cuts, why would there be significant interest in NI? And with the credit markets in flux, where is all this investment capital coming from?
All right, we’ve got no lure of corporation tax and no local tax raising powers. But we can offer forms of tax relief. For example, the Executive froze water charges for a year. Should the Finance Department not now be looking at exemptions/holidays in industrial rates for incoming US businesses? Our underspend makes this an option.
Let’s not think the Investment conference is going to be a shoe-in for some FDI. After all, we’ve been disappointed before due to our lack of negotiating leverage and one-dimensional approach on corporation tax. As staff at Bobballs have blogged previously, Bloomberg could provide alot of answers. Has a team been detailed by the Executive to chase him up?
Let’s not lack imagination, let’s have forward planning and a full spectrum of ideas/proposals. We trust that with Stormont back some answers will soon be forthcoming.