Corporation tax cut no silver bullet, but it may be the only weapon in the arsenal
The biggest champion of lowering the rate of corporation tax, Secretary of State Owen Paterson, has often said that if tax powers are not devolved to the Northern Ireland Assembly, there is no ‘Plan B’ to save the economy.
Mr Paterson has repeatedly stressed that the biggest risk is “doing nothing” and claims that businesses are telling him that the high tax rate compared to the Republic is one of the biggest problems they face.
Supporters of a lower rate are keen to point out that a reduced rate of corporation tax is not a silver bullet in being able to tip the balance in favour of the private sector in Northern Ireland, but it does appear to be the only weapon in the arsenal.
Northern Ireland is currently borrowing £233,000 every minute, and 77.6% of Northern Ireland's GDP is dependent on State spending. The region is also hugely reliant on public sector jobs.
With public spending and the £8bn block grant from Westminster due to be slashed and Civil Service jobs set to go as a result, if corporation tax is not lowered will Northern Ireland be plunged further into the economic doldrums? The Conservative MP had another busy day of campaigning yesterday, first addressing a round-table discussion in Belfast hosted by law firm A&L Goodbody before heading to the north west to address more business leaders in Londonderry.
Mark Thompson, corporate partner at A&L Goodbody, said that keeping things as they are “is not sustainable”.
“The business community has been behind the concept for some time. From a political perspective, economic theory seems to have been overtaken by hard policy — the analysis would now appear to have been done, and there seems to be a political will to make it happen,” he said. Privately, many of those involved in trying to attract foreign direct investment to Northern Ireland say that the region is “not on the radar” for most global firms.
Invest NI has long said that lowering corporation tax would give it extra power to attract investment.
But the body has refused to speculate on the implications of the rate not being changed.
Enterprise Minister Arlene Foster has said that without economic stimulus, such as a drop in corporation tax, the jobless figure here, currently at almost 60,000, will not improve.