Business Soapbox: Harry Parkinson
The importance of a cut in corporation tax for Northern Ireland has been well argued but, says the managing director of Close Invoice Finance, such a move by itself is not enough. The banks also have a role to play. Are they up to it?
Do I think corporation tax should be lowered in Northern Ireland? The answer is a resounding yes, and four out of five respondents in the latest Close Business Barometer agree.
The barometer, which gauges the opinion of SME owner managers on a range of financial issues, also revealed that 90% of those polled believed a lower rate of corporation tax would kick start the economy.
I concur with these findings. The position we're in now is unsustainable and the overdependence on Government spending and the public sector must stop. For the private sector to expand, we need global investment. And global investment is hard to come by when it's more attractive for international investors to take their business south.
It's not going to get any easier either, with an EU ruling stating that as from 2013, Invest NI won't be able to hand out grants to attract foreign investment.
A cut in corporation tax would certainly send a positive message to these companies about investing here.
It could potentially benefit the UK as a whole; Northern Ireland stands to gain more autonomy while in GB, taxes could fall as less public money is put into Northern Ireland - we're looking at a £300m cut from the block grant.
However, cutting corporation tax in itself isn't enough. For a lower rate to make any difference, the local banks have to provide funding for new investments.
The million-dollar question is, will they do that?
The current rate is holding SMEs back. Cutting corporation tax would let businesses expand, thus creating new jobs. It could make us less dependent on the rest of the UK and would rebalance the NI economy.