Corporation tax: Will the Budget deliver new rate?
Northern Ireland businesses will learn later today if the case for a reduction in corporation tax has been successful.
Calls have been made by the business community to bring corporation tax in Northern Ireland into line with the Republic in a bid to stimulate private sector investment.
Lyn Hagan, tax partner with Goldblatt McGuigan in Belfast said: “The question of the reduction in the corporation tax rate applicable to businesses in Northern Ireland due to the close proximity of the low 12.5% rate regime in the Republic has been on the agenda for some time here.
“Some are encouraged by the recent references that the Government would consider how this could be implemented and many bodies have confirmed that whilst recognising there would be related costs they would see such a move as important in developing the private sector of Northern Ireland with increased inward investment and the cumulative benefits such would bring, which in itself is taking on increasingly important significance in light of the extreme Budget cuts planned in the public sector.”
Those supporting a lower rate of corporation tax for Northern Ireland include Sir George Quigley, Gavin O’Reilly, Peter Robinson and Martin McGuinness.
Ms Hagan, who will be addressing a Goldblatt McGuigan/Belfast Telegraph post-budget breakfast tomorrow at The Holiday Inn on Belfast’s Ormeau Avenue, believes tax increases including Capital Gains and VAT will feature heavily in today’s emergency budget. The Chancellor George Osborne is due to address the House of Commons at 12.30 this afternoon.
“There is no doubt all shall be affected by this Budget, an increase in VAT alone shall have this effect,” explained Ms Hagan. “The headline rate mooted is 20% from the current 17.5% providing a reported additional £11.4bn into the Treasury’s funds.
“Whilst an increase in the VAT rate is considered to be inevitable, lobbying has been going on to seek a delay in the timing of any introduction and to avoid the extension of VAT to food, books and children’s clothing which are currently not subject to VAT.”
She added: “Whilst tax increases shall feature highly in the emergency Budget with little or no giveaways, save for some relief for the lower paid with increased personal tax free allowances, to say the Liberal Democrats pre-election proposal of £10,000 and a less bureaucratic tax credit system targeted purely at the lower paid, the overriding feature of the Budget will be the detail on the public spending cuts.
“The combined effect of the increase in the rate of VAT and |any reduction in the amount of public sector pay or number of employees will be have a significant dampening effect on the Northern Ireland economy although a first step in the process of redressing the Government’s deficit.”
To attend tomorrow’s free Budget Breakfast in Holiday Inn, Ormeau Avenue, Belfast at 7.30am in conjunction with Goldblatt McGuigan and the Belfast Telegraph please email Joan Connell on firstname.lastname@example.org. Economist and Belfast Telegraph columnist John Simpson will also be providing analysis.