Monday, September 6, 2010

EASY HEADLINES, HARD DECISIONS

Interesting to see that Jonathan Edwards, the Plaid Cymru MP for Carmarthen East and Dinefwr, has finally caught up with some of the recent discussions regarding lower corporation taxes for Wales.

In the current political climate of public sector cuts, this makes easy headlines but it seems that Mr Edwards, in his interviews with the Western Mail, always seems to constantly and conveniently forget to ask some key questions, particularly about his own party's role within the Welsh Assembly Government.

For example, if corporation tax was devolved to Wales, would it necessarily be reduced by the Welsh Assembly Government that was dominated by the Labour Party?

Currently, Plaid Cymru is wedded to a Labour Party that, during the last Brown administration, actually raised corporation tax for small firms across the UK.

Given the ambivalent attitude of many Labour members towards wealth creators, there is simply no guarantee that Assembly Government control over corporation tax would reduce taxes for business in Wales. Indeed, given Labour's recent record at a UK level, could it end up increasing corporate taxes as a justification to support increased expenditure in public services?

There is also the question of Plaid's record in Government on the other  main form of business taxation, namely non-domestic rates.

Back in 2007, the Party of Wales promised that 50,000 businesses in Wales would no longer pay business rates.  Yet, despite this being their main economic policy during the Assembly election, the pledge was quietly dropped as part of the One Wales Agreement.

Not surprising really, given that this was an agreement with a Labour Party that, during the previous 2003-2007 WAG administration, had doubled rates within rural parts of Wales when they abolished the rural rate relief scheme.

As a result of the broken promise by Plaid Cymru, Wales is left with a situation when the majority of small firms actually pay higher business rates than their equivalents in England and Scotland. Indeed, one has to ask how a political party that asks for cuts in corporation tax doesn't apply the same principles to business rates.

As three quarters of small businesses in Wales are sole traders or partnerships, it is clear that any reduction in corporation tax would have no impact on the majority of Welsh firms whereas a cut in business rates would help enormously.

Easy headlines for the Western Mail are all well and good but when it comes to actually doing something to help small businesses in Wales through equalising business rates with England and Scotland, Plaid Cymru has simply failed to do anything, despite having the powers to do so.

There is also the question of Plaid Cymru's Economic Renewal Programme, which has withdrawn financial support for the majority of small firms in Wales through focusing it effort on six key sectors. How will a decision to stop small businesses in key sectors such as construction, business services, wholesale and retail, food and drink and other non high technology manufacturing from accessing support help the Welsh economy emerge out of the recession over the next couple of years, especially in rural Wales?

Finally, has anybody bothered to ask the Welsh Assembly Government (in which Plaid holds the economy portfolio) whether it has actually begun any discussions with the UK Government and the other devolved administrations about the feasibility of devolving corporation tax, as suggested by Gerry Holtham in his recent review?

I would suspect, given the current chaos within the Department of Economy and Transport, that the answer is no.

Given such questions, perhaps Mr Edwards would be better off, in the future, discussing such matters of economic policy in Wales with Ieuan Wyn Jones rather than Martin Shipton.