Setting rate that will lure foreign investors
And so the great tanker of debate on our corporation tax rate gathers speed.
The Northern Ireland Affairs Committee's (NIAC) assertion that "there is a convincing case for reducing the corporation tax rate in Northern Ireland" has received a warm welcome from business groups. And so it should.
After years of campaigning, cajoling and corralling, the prospect of the Executive being given the power to set business tax is at last within reach, although by no means a given.
In such tough business conditions, anything that gives our struggling economy a boost is to be welcomed.
Doubts have been raised as to whether a lower tax rate is really a big factor for an overseas company when it comes to investing in these shores but any accountant worth his or her salt would surely point their client in the direction of the region with the lower headline rate. At the moment, that means the Republic and although its economy may be struggling, its tax rate is still a big plus.
A survey of more than half of the top 250 Irish-American business leaders by law firm Matheson Ormsby Prentice and Amarach Research found 29 per cent saw the Republic's 'competitive' tax regime was the primary positive factor which made it attractive for foreign direct investment. That would mean a lot of dollars if we could attract even a fraction of the 32 per cent who said they were considering setting up operations in Ireland. Off course, a fraction may be a pessimistic figure because if the Executive were to be given tax setting powers it could end up going 2.5 percent better than than merely matching the Republic's rate to 10%. If those business leaders were as good as their word then we really would be laughing.
Just look at the stats. According to a report by academics at John Hopkins University, US firms invested $120bn in Ireland since 2000.
Quite rightly the report by the NIAC sounds a note of caution, particularly in relation to the Azores agreement and the fact the Executive must take responsibility for the financial consequences of the reduced tax rate. Interestingly, the biggest administrative hurdle in this case is trying to figure out how much corporation tax the Government currently takes from Northern Ireland. It seems no one knows.
But these are hurdles which can be cleared and should pale into insignificance if we can boost the level of foreign direct investment.
The report says "a low rate of corporation tax would be advantageous, but on its own would not be a panacea for all Northern Ireland's economic ills".
No one believes that there will be an overnight cure, but anything that can ease the pain will certainly smooth the path to recovery.