Belfast Telegraph

Corporation tax cut for Northern Ireland is a risk, admits Treasury chief

By Sam Lister

The Treasury has admitted that cutting corporation tax is a risk with clear consequences, despite Northern Ireland Secretary Owen Paterson's pledge the move was “emphatically not a gamble”.

Exchequer Secretary David Gauke warned that if receipts were lower than expected, |the Northern Ireland Executive would have to take the hit, |although it would also reap the |rewards if they were higher than predicted.

He told MPs that while some taxes were fairly steady, corporation tax was “volatile” and was particularly prone to big reductions in receipts during times of recession.

Over the past few years the number of Northern Ireland companies paying the levy has varied between 50% and 63%.

To comply with European laws, responsibility for the tax must |be devolved to Stormont and |the block grant must be reduced accordingly, something that |has caused concern among MPs and MLAs. “There are consequences,” Mr Gauke warned the Northern Ireland Affairs committee.

Asked if he agreed with Mr Paterson's assessment that the |decision was not a gamble, he was at pains to insist he “always agreed” with the Secretary of State.

Pressed to give an assessment, he added: “Gamble has a pejorative tone to it, but there are clearly risks involved.

“But, as the Secretary of State said, there are also risks in doing nothing.”

Mr Gauke was also pushed on how committed the Government was to making the cut from 28% to 12.5%, bringing the rate into line with the Republic.

He sidestepped any firm commitment, telling MPs: “You ask if this was a done deal — we have been very clear that this is a consultation.

“If the Treasury wanted to kill this idea it would have done so.”

He said the final decision would be made in response to the current consultation.

The committee also criticised the Treasury for being unable to give an accurate figure about how much cash was generated from Northern Ireland's corporation tax receipts.

The DUP's Ian Paisley jnr asked who was winning from the “black art calculation”, while committee chairman Laurence Robertson said: “I find it unusual that the precise figures are not known by the Treasury.”

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Secretary of State Owen Paterson has been a keen cheerleader of a reduction in corporation tax.

He has staked his reputation on|bringing about a massive transformation of Northern Ireland's economy by fuelling growth in the private |sector and reducing reliance on |state-backed jobs.

He wants to turn the region into an enterprise zone, and said |reducing the levy was “emphatically not a gamble”.

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