Quigley dismisses corporation tax move

Budget 2007

Chancellor of the Exchequer Gordon Brown leaves 11 Downing Street with his traditional red briefcase, ahead of presenting his budget in Parliament in London, Wednesday March 21, 2007.

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Sir George Quigley, wanted corporation tax reduced further

Thursday, March 22, 2007

By Robin Morton

Gordon Brown's corporation tax cut is "neither here nor there" as regards helping make the Northern Ireland economy competitive, Sir George Quigley said today.

Sir George, chairman of the Industrial Task Force, said the narrowing of the gap by 2% was not the sort of dramatic structural change that was required.

The Chancellor announced in his Budget that the headline corporation tax rate was to be cut from 30% to 28% across the UK.

The measure is a long way short of the Industrial Task Force's demand for the rate in Northern Ireland to be cut to 12.5%, in line with the rate in the Republic.

Sir George, a former permanent secretary at the Department of Finance, and current chairman of Bombardier Shorts, said the 2% cut would "do very little to help us attract a fair share of quality jobs".

He said: "It is good that Gordon Brown is recognising that corporation tax is a significant factor in the competitive equation.

"The problem is that he is benchmarking the UK against major world economies, as he is entitled to do, but our challenge is to make Northern Ireland competitive against our immediate neighbour, the Republic.

"The reduction of the gap from 17.5% to 15.5% between north and south is neither here nor there in terms of attracting foreign direct investment to Northern Ireland.

"The Republic has shown that being able to offer a 12.5% rate is a tremendous market arousal factor, something that makes people sit up and take notice."

Sir George pointed out that the Economic Research Institute report published last autumn had shown that a cut to 12.5% in corporation tax would be self-financing within 10 years and would contribute £17bn to the Treasury over the following 17 years.

Sir George said this could mean a reduction from £6bn to £3bn in the annual subvention from Westminster to Northern Ireland.

"It would mean we are reducing our public sector dependency and moving towards an economy which is dominated by the private sector."

The proposal for a cut in corporation tax was first tabled in 2005 by Sir Anthony O'Reilly, chief executive officer of Independent News and Media, owners of The Belfast Telegraph, and it is being promoted by the Telegraph's Better Deal for Business campaign.