Hi °C | Lo °C Around 60 Northern Ireland businesses have joined politicians in Westminster to lobby for a cut in the province’s rate of corporation tax.
The Treasury is due to announce over the summer whether the power to set Northern Ireland’s own corporation tax rate can be devolved to the Assembly.
A long-running campaign by business groups culminated in yesterday’s event, which was addressed by First Minister Peter Robinson.
The large group of business people, from Jim Dobson of meat company Dunbia to Mark Lowry of construction firm Northstone, left their workplaces for the day to attend the London event.
Ian Coulter, chairman of the Confederation of British Industry (CBI) in Northern Ireland, which co-ordinated yesterday’s reception at St Ermin’s Hotel, said geographical and economical factors meant that Northern Ireland required an “extra tool” to generate employment.
“Now we need a decision, one which if made this summer could boost confidence and start attracting high-quality investment and jobs to the province.”
On Monday lobby group GROW NI held an event to Stormont to galvanise support among MLAs as decision-time draws nearer.
Secretary of State Owen Paterson told delegates planning and corporation tax were uppermost in the minds of potential investors who were deciding on which part of the border to make an investment. He said Northern Ireland had lost out on investment opportunities because its corporation tax rate, at the UK rate of 24%, is higher than in the Republic, which has a rate of 12.5%.
He welcomed the wide political support for cutting the rate. “For me it is very important we have that unity and don’t underestimate that. I can walk into the Cabinet and say, I have complete agreement across the political spectrum. That is really powerful.”
He said the Treasury should issue a decision some time after the next meeting of the ministerial working group on June 25.
John Cunningham, chief executive of Kelvatek, said the thought of leaving a positive legacy for his grandchildren had spurred him on to set up Kelvatek after selling electric transformers business Kelman to General Electric.
“Companies like ours mean that people now have the opportunity to stay and raise their families here, it means that grandparents like me can stay in contact with their children and grandchildren.”
Lord Kilclooney, a unionist peer and businessman, is opposed to a cut. In a letter to the Financial Times, he said: “A reduction in corporation tax for Scotland and Northern Ireland would be costly for the people who live there. In the latter, the block grant ... to Stormont would be reduced by an estimated £500m per year, and this would mean massive savings — for example, closures of schools and hospital wards — by the Stormont departments.”
Trade unions are also opposed to a cut. Eugene McGlone of Unite said: “This is just a tax grab and without any requirement to invest in jobs, research or development. It is just a windfall for the richest.”
60 reasons why Stormont should be given power to cut the rate of corporation tax
1 Studies say we could create multiples of 10,000s of jobs over 20 years with low corporation tax
2 The economy has been under-performing for 50 years and is still under-performing nearly 20 years after the end of the Troubles
3 We are geographically isolated and share a border with a neighbour with a much lower corporation tax rate
4 The legacy of the Troubles is still felt in the economy
5 Invest NI’s selective financial assistance is going to be reduced significantly next year, making it even harder to attract foreign investors
6 Lower corporation tax rates have made a big impact on the economy in the Republic
7 Academic and economic studies prove that lower corporation tax will make Northern Ireland more attractive to foreign direct investment
8 It will bring more long-term, sustainable and well-paid jobs
9 It will give Northern Ireland the confidence and extra means to reinvest in the future
10 It will transform our economy over the next 10 to 20 years
11 The annual cost of a cut is a small percentage of the Northern Ireland budget — that cost is manageable, but the upside is enormous
12 The cost of not cutting corporation tax is much greater
13 There is no cost to the rest of the UK and the future benefits will be a Northern Ireland which can pay its way
14 Implementation will be detailed but it is achievable, and nearly all the necessary legislation still exists
15 Lower corporation tax will benefit our homegrown companies and will have a ripple effect on towns across Northern Ireland
16 A cut would bring considerable benefits across sectors, including many small service businesses, tourism, hospitality and construction
17 We are asking the Government to help Northern Ireland to help itself
18 Without radical change it seems inevitable that Northern Ireland will remain the UK’s poorest region
19 This will create much needed jobs for our young people — one in five of 18-24-year-olds in Northern Ireland are currently unemployed
20 We would benefit from a much larger private sector, including 80-90,000 extra jobs over 20 years. Many of these new jobs would have above-average salaries
21 The UK Treasury would gain from additional tax revenues from income taxes, national insurance, VAT etc. This would lead to a smaller subvention
22 Northern Ireland is the ideal region in which to conduct an experiment with low corporation tax due to its small size and its remoteness in the UK
23 Lower corporation tax is the best means to redevelop the UK’s poorer regions and to achieve a more balanced national economy
24 This would generate higher GDP and more tax revenue
25 There are few other alternatives to generate a substantial acceleration in growth in Northern Ireland. Grants are being constrained under EU state aid rules
26 The prize is a restructured and much more prosperous economy, closer to fiscal sustainability within the UK and no longer needing to depend on taxpayers elsewhere in the UK
27 It would allow us to compete with the Republic on a level playing field for foreign investment
28 After investment grants to private firms are reduced under EU state aid rules, we will have limited means to generate jobs
29 The outlook for future job growth in the province is unfavourable without a cut in corporation tax
30 The economy of Northern Ireland is propped up by a huge subsidy from the rest of the UK. In 2008/9 public expenditure was £17.7bn, and just £11.5bn was raised in taxes
31 The UK now has the eighth highest rate of corporation tax in the 27 EU countries
32 The Republic’s government acknowledges its competitive corporation tax regime has been crucial in attracting investors and insists it is retained in the face of other cuts
33 The job opportunities created would stop the ‘brain drain’ in Northern Ireland
34 The lesson from the Republic is that much of the additional activity would be in the form of high value-added activities, since low taxes on profits are particularly attractive to highly profitable firms
35 Under-spending by Northern Ireland departments in the last three years has ranged from £210m to £382m. If this continued, a corportation tax cut would make no real difference to money reaching frontline services
36 In particular, a competitive tax structure can be a positive factor in boosting private sector investment research and development and economic growth
37 Academic studies report taxation is a significant determinant of economic growth
38 Corporation tax in the Basque country is sitting 2% lower than Spain and it has a GDP 30% higher than the Spanish average
39 Work in the American Economic Journal suggests that in the OECD, a 10% reduction in corporation tax has typically increased investment rates by over two percentage points, doubled the number of entrepreneurs per 100 in the population and raised company registrations by 20%
40 A study by Ernst & Young identified level of corporate tax, administrative burden and the level of personal tax as three key areas which the UK needs to address in order to keep attracting investors
41 Another argument for lowering corporation tax is that it can stimulate the economy here through increased domestic investment as well as entrepreneurship
42 It would have a significant impact on living standards
43 It would create a more prosperous future for our children and our children’s children
44 There were over 10,000 jobs created by foreign direct investment in the Republic last year despite economic problems, and low corporation tax was the main reason for those new jobs
45 If a foreign direct investment project comes to Northern Ireland rather than elsewhere, then at least it goes to part of the UK rather than no part
46 The island of Ireland could be sold as a low tax region, just as Tourism Ireland sells Ireland as a place to visit
47 It will increase the demand for commercial property and domestic property which will uplift the overall housing market in Northern Ireland
48 It will help Northern Ireland, as a sterling-based low tax location, to enter the UK and European markets
49 It will allow Invest NI to compete for foreign direct investment with other low corporation tax countries, which it can't do at present
50 The initial reduction in the block grant is not removing money from Northern Ireland, it is just moving it from the public sector to the private sector
51 It will raise the profile of Northern Ireland on the global stage
52 Northern Ireland could spawn the next big thing in the digital world - the iPod, Facebook and LinkedIn all came about from the combination of a strong knowledge economy and attractive fiscal levers
53 The rate need only be applied to trading profits, - this would encourage profits from companies that employ people rather than just owning assets
54 It is the stated aim of Grow NI, the umbrella organisation of all Northern Ireland’s main business organisation
55 The initial reduction in the block grant is about 2% of the Northern Ireland Assembly budget — a percentage any business would spend to market its product
56 Increase cashflow will help homegrown companies scale up faster
57 Increased foreign direct investment will bring more sponsorship and collaboration opportunities for the culture, arts and leisure sectors
58 This will encourage more companies to open profit centres and to base their European headquarters in Northern Ireland
59 This will create more career paths and choices for young people through the growth of homegrown companies and foreign direct investment
60 This will circulate more money into the Northern Ireland economy and stimulate demand for local consumer products and services
