Business tax cut no panacea, MPs told
A cut in corporation tax here would impede trade and encourage opportunist investors, a leading tax expert has warned.
Richard Murphy, director of policy group Tax Research, claimed the costs for administration alone would be “colossal” for companies trading in Northern Ireland and the rest of the UK.
Union leader Peter Bunting also raised fears about slashing the levy and called instead for investment to be channelled into growing firms already based in the province.
The pair were giving evidence yesterday at the Northern Ireland Affairs Committee, which is investigating the impact of reducing the rate from 28% to bring it in line with the Republic at 12.5%.
They both roundly dismissed calls from MPs that it would have a major impact on attracting inward investment, warning it would only be the transient firms, not those committed to Northern Ireland that came.
Mr Bunting, assistant general secretary of the Irish Congress of Trade Unions, said: “People who won’t contribute one iota to the Northern Ireland economy will make additional profits.”
He questioned why, if it was so successful, there had not been a mass exodus from the UK to the Republic. Instead, he said, the only movement “under this wonderful paradise” had been the other way round, with Coca-Cola and Aer Lingus moving north.”
DUP MP Ian Paisley disputed the claims, saying any increase in PAYE would benefit the economy and blamed trade unions for the Aer Lingus move.
Laurence Robertson, committee chairman, added: “It is an extraordinary claim to make that a company creating profits does not help the economy in Northern Ireland.”
The committee was told that even if the rate was cut, Northern Ireland it would never be able to compete with the Republic because the UK Government |remains ultimately in charge.
The committee also heard there was a “real chance” of a cut being challenged under the Azores ruling, the European judgment that sets out the rules over the implementation of regional tax rates.