Belfast Telegraph

Devolution of corporation tax power to Assembly isn't likely 'even if government restored'

By John Mulgrew

Northern Ireland is "unlikely to have the political and administrative capacity" to have control over corporation tax even if devolution is restored this summer, it has been claimed.

It comes as Sinn Fein has said the region may not get its low 12.5% business rate until 2021.

The cut-rate business levy was backed and marketed by former First Minister Arlene Foster and late Deputy First Minister Martin McGuinness.

It has been used as one of the main marketing tools by Invest NI to sell Northern Ireland to major international investors, including the US, and even got the backing of Ballymena's own Hollywood superstar Liam Neeson.

It was due to be devolved to the Assembly in April 2018.

But economist John Simpson said: "For now corporation tax changes in NI are postponed probably, at least, to 2020."

Invest NI's chief executive Alastair Hamilton told a major US news network that the 12.5% rate may not come into effect until "two or three years".

Economist Esmond Birnie said the landscape here has changed significantly in the last seven years, with a Conservative government planning to cut the overall national rate to 17%.

"NI has not helped itself in terms of its internal decision-making process," he said.

"It was always the case that devolution of the power was going to be conditional; have a viable, balanced regional Budget and have a functioning Executive in place. Those conditions are not in place and may not be for some time, even if devolution is restored at the end of June.

"A Labour election victory on June 8, if it was followed by a push in UK corporation tax back to 26%, might start to make a regional rate a more effective instrument, but it still looks unlikely NI will have the political and administrative capacity to operate such a policy."

A spokeswoman for Invest NI said: "Last week, during an interview in the US with CNBC, promoting Northern Ireland as an investment location, Alastair Hamilton was asked about tax as an incentive to investors.

"In response, and based on the Department of Finance statement, Alastair commented that Northern Ireland had 'agreement that will take our corporate tax level down to 12.5% inside the next two to three years'.

"Using the word 'inside' leaves scope for the implementation to happen at any time during that period. This was a general phrase to reassure potential investors the reduced rate will still happen, and fairly soon. It was not a definitive statement that the implementation date was now 2021, as some are suggesting.

"There remain a number of steps to be taken by UK Treasury, the Northern Ireland Executive and Assembly to effect the reduced rate.

"Until such times, Invest NI will continue to promote the commitment to a reduced rate of corporation tax and the additional benefit this will have on investment projects."

The campaign to secure a low rate of the duty here started around 20 years ago, and picked up the pace in 2007. Cutting the tax level was first pushed by the late Sir George Quigley.

Economist John Simpson said: "It is a significant statement. Now a certainty is becoming uncertainty. At the moment, we are in a position where we are not sure where the British Government will be in terms of setting the rate of corporation tax.

"If the Conservatives win the election, they will bring it down.

"But much more important, while we are sitting in the shadows of the Brexit negotiations, we don't know what the outcome will be. It is possible that the Brexit negotiations will give us a favourable or an unfavourable deal."

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