North could cut corporate rate to 12.5%

THE British government has published a consultation paper that may allow the North’s power-sharing executive to reduce the region’s corporation tax rate to 12.5% — the same as Ireland’s.

Reducing corporation tax to encourage investment could make the North less dependent on Britain, the First Minister said.

Peter Robinson welcomed yesterday’s treasury consultation on handing the executive powers to vary the tax rate as a good news day for the North.

Mr Robinson said: “It is not in the interests of Northern Ireland to be the beggars of the UK.

“It is not in the interests of Northern Ireland to be dependent on the exchequer for further new growth within our own economy.”

He added that the North should become a contributor rather than relying on handouts.

“We have crossed the Rubicon to some extent. It is not a done deal but we are now talking about the detail rather than the principle and that is real progress,” he added.

Exchequer secretary to the Treasury, David Gauke, said the consultation reflected the commitment to meeting economic challenges which the North faces, including the legacy of the conflict and the region’s proximity to the low-tax Republic.

“It may well be the case that a lower rate of corporation tax in Northern Ireland can play a significant part in helping to strengthen the economy,” he said.

“This consultation is a real opportunity for the people of Northern Ireland to talk this issue through, to balance these costs and risks with the potential transformative effects of lower corporation tax rates.

“It is a chance for Northern Ireland to set its own principles and priorities and to play a more direct role in determining the competitiveness of its economy.”

Northern executive finance minister Sammy Wilson said the government’s consideration of the benefits anticipates a single increase in the level of investment in the North in the early years and not the increasing investment and growth year-on-year that other commentators on this issue have predicted.

“In my view this may underestimate the benefits and crucially the document does recognise that opinions on this do differ making consultation views on this crucial,” he said.

He added: “The estimated costs and impact on the block are also significant — at the upper end of all previous estimates.

“Practically speaking we would have to look at how we could manage these, making the options where the reductions would be deferred or phased in over several years after any decision vitally important to minimise any impact on public services.”

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