Belfast Telegraph

Cutting corporation tax could be solution for tackling fiscal deficit

By David Elliott

A plethora of new data to get stuck into over the last 24 hours means the economists' calendar has been well thumbed.

House prices are the most obvious numbers to grab attention given the fact we can all associate with what was, not that many years ago, part of one of the most phenomenal bull runs in economic history.

That obviously came crashing to a halt and it's a sign of the times we live in that a 1% quarter-on-quarter decline is something to be welcomed.

There's no denying that the rate of decline has slowed but what's even more interesting is news that the number of houses changing hands has increased.

According to estate agents activity has increased most in urban areas where a higher rate of transactions means sellers can get a much better idea of the true value of houses. In rural areas, where the turnover of houses is less, it appears vendors are reluctant to take a haircut on the value of their house and hence transaction numbers are low.

In essence, the market is too opaque and illiquid.

The latest figures from the DFP should help alleviate that, coming as they do split into property type and location, two factors which are difficult to accurately gauge from other housing market reports.

Meanwhile, latest figures for Northern Ireland's fiscal deficit for 2010-2011 - while a slight improvement on 2009-2010 - still make difficult reading.

That we accommodate a deficit of £10bn a year is astounding, especially given that on a per person basis that's two and a half times that for the UK as a whole.

Ironically, such a figure shines a light on why we need to cut corporation tax here rather than why we shouldn't.

It may seem counter intuitive to cut the amount of money the government brings in through business tax but the long-term benefits will surely outweigh the any short-term losses.

By bringing more inward investment to these shores we'll reduce unemployment and other costs which will eventually help bring down our fiscal deficit.

Let's hope David Cameron sees it that way because it's his signature we're waiting for.

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