Cut in corporation tax for Northern Ireland could put Republic in the shade
Northern Ireland may now be a more attractive destination for inward investment than the Republic after a date and rate for a corporation tax cut was confirmed, it has been claimed.
The province will have a new lower rate of business tax of 12.5% from April 2018 - bringing it level with the Republic's levy, which has been credited with helping it attract global tech giants like Facebook, Google and Apple to its shores.
But it has been claimed that pre-existing characteristics of Northern Ireland, including its lower cost of living, could ultimately make it more attractive than its near-neighbour to foreign investors.
The corporation tax rate concession is part of a suite of financial measures detailed in A Fresh Start - The Stormont Agreement and Implementation Plan, which was agreed by Sinn Fein and the DUP on Tuesday .
Economist Neil Gibson, director of the Northern Ireland Economic Policy Centre at Ulster University, said the parity of rates would be good for the island as a whole.
But he added: "There is obviously an element in which it improves Northern Ireland competitiveness relative to the Republic and in certain other aspects. For example, in wages or cost of living, there is already an advantage in the North, so certainly there is an element of increased competition. It brings Northern Ireland to the investment table in areas it previously was not able to access."
The Chartered Accountants Ulster Society, which represents 3,800 accountants, has welcomed the agreement.
Chairman Patrick Gallen said: "The 'fresh start' is tremendous news for Northern Ireland and we hope that this can be the beginning of a new era of co-operation which provides a basis for a better future for all in Northern Ireland.
"The deal gives our politicians the platform to put Northern Ireland's finances on a sustainable footing and is a significant step towards securing a normalisation of our politics and society.
"We hope that this will bring an end to the stop-start political progress of recent years."
Mr Gallen added: "As an organisation which has campaigned for a long time for the benefits that a cut in the rate of corporation tax can bring to Northern Ireland, we are particularly pleased that a date and a rate for implementation have been agreed."
Meanwhile, Finance Minister Arlene Foster said the devolution of corporation tax powers would give the Executive the ability to "transform" the economy and "improve the lives of everyone in Northern Ireland".
Minister Foster said the new 12.5% rate of corporation tax could propel Northern Ireland forward by encouraging firms to grow, improving foreign direct investment and delivering jobs.
In a joint statement with Enterprise Minister Jonathan Bell, the minister referred to research by the Northern Ireland Economy Policy Centre at Ulster University which projected that by around 2033, there could be 30,000 more jobs in the province and output 9% higher if there was a 12.5% rate.
And Glyn Roberts, chief executive of the Northern Ireland Independent Retail Trade Association, said it was now "crucial" that the timetable to devolve corporation tax by April 2018 was maintained.
Welcoming Tuesday's accord, he said: "Political stability is the bottom line for sustainable economic development, and so we welcome this agreement."