Belfast Telegraph

Saturday 19 April 2014

Scottish corporation tax debate focuses minds in Northern Ireland

Winds of change: Scotland votes for independence next September

The debate in Scotland over lowering its rate of corporation tax will not affect the campaign to do the same in Northern Ireland, experts have predicted.

Nigel Smyth, director of the CBI in Northern Ireland, said the discussion in Scotland related to politics rather than economics.

"Some parties in Scotland are arguing that it can be self sufficient which Northern Ireland never will be," he said.

"We want a lower corporation tax to transform our economy and create jobs. I don't think it impacts on our campaign."

Campaigners in Northern Ireland are awaiting a decision on whether the corporation tax rate – currently 23% – will be lowered, saying it could enable Northern Ireland to compete more effectively for investment with the Republic, which has a rate of 12.5%.

Following a consultation process and the publication of a government White Paper, the decision has been stalled until after Scotland votes on independence next year.

Last week the Scottish government suggested that cutting corporation tax in an independent Scotland would lead to a "jobs boom".

The statement was made at an event to launch a 200-page document setting out the economic policy choices available if voters said "yes" to independence in a referendum on September 18.

The paper said that increasing Scotland's economic activity rate by one percentage point would be equivalent to an extra 30,000-plus people in the labour market and that reducing corporation tax, and changing the tax system in general, could create approximately 27,000 jobs. But Eamonn Donaghy, head of tax at KPMG and spokesman for lobby group Grow NI, which calls for a lower rate of corporation tax in Northern Ireland, said: "Nothing will happen in Northern Ireland until after the Scottish referendum but there is a lot of work going on in the background to facilitate a decision.

The Scottish National Party led by First Minister Alex Salmond (below) has said that lowering corporation tax in Scotland would create 27,000 jobs, what they did not articulate was the cost of doing so.

"The total level of corporation tax in Northern Ireland lifted last year was £500m – Scotland is a much bigger economy and they have to decide if the cost of reducing the tax rate is going to be worth it.

"27,000 jobs in a country the size of Scotland will have a lot less impact than the 40,000 jobs it has been predicted Northern Ireland could attract with a lower corporation tax rate.

"Also, Scotland are planning to do all sorts of things with lots of different taxes.

"Scotland has other fiscal issues, I think that they've got a tough choice to make, they have a lot more tax issues to consider than we do," he added.