Villiers: Business tax cut in Britain will benefit NI
Cutting the UK’s corporation tax rate will help rather than hinder Northern Ireland’s own plan to offer would-be investors an even lower rate, Theresa Villiers has insisted.
The Northern Ireland Secretary rejected the argument that reducing the differential between the region and Britain will undermine what is one of Stormont’s flagship economic policies.
Ms Villiers argued that devolving tax powers from Westminster was less about giving Northern Ireland a competitive advantage over the rest of the UK and more about giving it an edge internationally to compete with countries such as Hungary.
She said cutting the UK rate from 20% to below 15% — as suggested by the Chancellor this week — would make Stormont’s planned 2018 reduction to 12.5% more affordable, as less would have to be sliced off the annual block grant to fund the tax cut.
“It doesn’t actually detract from the competitive offer that Northern Ireland would be able to give with a 12.5% rate, because they are not really competing with Manchester — they are competing with Hungary and other countries around the world who have much higher corporation tax rates,” said Ms Villiers.
She added: “I think the reduction of the main rate is very good news for that very long-running campaign to deliver a 12.5% corporation tax rate in Northern Ireland, because the cost of delivering 12.5% has just gone down.”
Brexiteer Ms Villiers, who has backed Andrea Leadsom in the race to become the new Tory leader, defended the suggested UK rate cut as she reflected on the wider fallout from the referendum in Northern Ireland, where 56% voted Remain.
First Minister Arlene Foster has questioned the need to off-set a corporation tax cut with a reduction in the block grant in the wake of Brexit — given the law that required it was set by the EU.
Ms Villiers has insisted the stance of the Treasury will not change, claiming that the issue of “fairness” with the rest of the UK was more central than EU law.
“If this tax cut is delivered by the Northern Ireland Executive then it needs to be funded by the Northern Ireland Executive,” she said.
The Conservative MP also reiterated her view that it would be “perfectly possible” to regulate the movement of people and goods between Northern Ireland and the Republic of Ireland without a hardening of the Irish border.
And she dismissed the suggestion more rigorous checks would be required on travel between Northern Ireland and the rest of the UK after Brexit takes place.
In the wake of the referendum Sinn Fein called again for a vote on Irish unity, claiming the majority of voters in Northern Ireland should not be “dragged out” of the EU against their wishes.
Under the terms of the 1998 Good Friday Agreement the Secretary of State has power to trigger a border poll if she believes there has been a significant shift in public opinion in favour of a united Ireland.
While Ms Villiers has made clear she does not believe such a shift has occurred, republicans have pointed to the surge in applications for Irish passports in the wake of the referendum as evidence of a change.
“I don’t think necessarily that seeking an Irish passport would necessarily indicate a change of view about Northern Ireland’s constitutional future,” she responded.