The time is right to say yes to a reduction in our corporation tax
Eamonn Donaghy, head of tax at KPMG Belfast, believes a reduction in corporate tax could lead to more jobs and a stronger Northern Ireland economy.
The debate over whether a lower rate of corporation tax would help the growth of the Northern Ireland private sector has ebbed and flowed for several years.
Whilst the mechanics of Northern Ireland being able to achieve a reduced rate of corporation tax are somewhat detailed, the objective is very clear. Low corporation tax has the ability to enhance the growth of the private sector by encouraging foreign direct investment and promoting indigenous business growth which in turn will lead to the creation of long term well-paid sustainable jobs.
Indeed, the latest research from the Economic Advisory Group (EAG) concurs with previous research carried out by the Economic Reform Group that a reduction in the rate of corporation tax to 12.5% could lead to the creation of nearly 60,000 jobs over the next two decades. On a more worrying note, the EAG report clearly states that under current economic policies, the growth of the private sector in Northern Ireland will be a mere fraction of that which can be achieved as a result of reducing the rate of corporation tax.
Economic growth is not just for the owners of companies. Economic growth results in more people in employment, a greater level of disposable income and greater opportunities for small businesses and retailers. Increasing economic prosperity is a rising tide that will lift all boats.
There are a few opponents to this proposal who indicate that there can be no guarantee of success. Unfortunately, one can never guarantee success from any economic policy, however, based on the findings of the EAG report, unless Northern Ireland is prepared to take this step then what is guaranteed is the continued massive under-performance of the private sector and an economic stagnation, which inevitably will lead to significant emigration of our younger population seeking gainful employment elsewhere.
Of course, corporation tax reform by itself will not deliver economic success.
However, many of the other ingredients necessary to grow our economy already exist in Northern Ireland in the form of a well-educated workforce, membership of the EU, being part of a stable United Kingdom economy and a heritage for hard work and innovation. Low corporation tax will provide the necessary stimulant to maximise the great attributes that Northern Ireland already has to offer.
However, low corporation tax will not happen unless the people of Northern Ireland ask for it to be delivered. The business community here has come behind the campaign to devolve corporation tax powers to the Assembly and Grow NI, the body which represents all of the major business organisations in Northern Ireland, unanimously supports this.
In turn, the five main political parties in Northern Ireland have pledged to call for the devolution of corporation tax and to facilitate the implementation of a low rate of corporation tax in a fair and appropriate way.
I'm in New York to speak at the New York, New Belfast Conference, to promote transatlantic partnership. I am meeting US business organisations who all speak very highly of the business attributes of Northern Ireland.
However, time and time again they tell me that compared to the low corporation tax rate in the Republic of Ireland, the Northern Ireland tax rate is a barrier against doing business. These organisations are telling me that if the Northern Ireland corporation tax rate was the same as the Republic's they would place investment here. It's that clear cut!
The current Treasury consultation process requires responses from all interested parties.
This is an opportunity for all businesses and indeed all organisations to voice their support for devolution of corporation tax to Northern Ireland. We are getting an opportunity at Westminster to ask for a powerful economic incentive tool. We should not squander this opportunity.
Responding to the consultation is simply a case of submitting a letter or an e-mail to the Treasury voicing your opinion on this matter.
The email address is: email@example.com
It's decision time!