Hi °C | Lo °C Finance Minister Sammy Wilson has warned that reducing Northern Ireland’s corporation tax on the terms being offered by the Treasury would be a “rip-off” and that water charges will eventually have to come in.
Business leaders believe that cutting corporation tax to the 12.5% charged in the Republic would spark an economic revival.
Declan Kelly, the US economic envoy, argues that it would attract high-end US firms to rebalance the economy away |from its dependence on public spending.
However, Mr Wilson warned that the bill of around £300m a year we would face would not be worth it. That is the rough amount that the Treasury proposes offsetting against our block grant.
“We don’t want the Treasury saying ‘these people are mad keen to rebalance the economy, so let’s rip them off in the process’,” Mr Wilson said.
“The first thing we are going |to do is fight with the Treasury about the cost which they have set aside for corporation tax. It is not a fair deal.”
Under European law the only way the tax can be reduced is to devolve power to levy it to |Stormont from Westminster, with Stormont bearing any cost in |lost revenue.
Mr Wilson believes the Treasury, with whom he has been negotiating, is effectively over-charging the province.
He believes that it has failed to take into account increased revenue that would flow to central Government if the Northern Ireland economy revived.
“If you create more jobs, Westminster gathers more income tax here and more VAT. Should that not be written off against lost tax revenue?” he asked.
“They say that Europe wouldn’t allow that, but they haven’t been tested and I want to see it tested.”
He also wants to reduce the cost by targeting tax breaks on firms to meet aims for investment, job creation and training.
“A flat reduction in corporation tax everybody gets, even companies who won’t invest another penny, don’t employ an extra person, don’t put tuppence into research and development and don’t develop new markets.
“I’d rather reward someone who diligently takes their profits, puts it into new machinery, training of workers and developing new products.
“We are all looking at ways to build the private sector but you need to make sure that if |you take that huge step, you do so in a way that ensures that you get the return.
“It could be worthwhile if we get the right deal, I have never ruled it out.”
He added: “If we get it, let’s make sure the cost is as low as we can get it.”
Stormont loses £500m a year by failing to impose separate water charges which apply |in the rest of the UK. Mr Wilson |argued that the next Assembly may have to do so to cover essential investments in the infrastructure.
However, Mr Wilson wants to squeeze waste out of the public sector before imposing new taxes.
He said: “There are efficiencies within the system that we can achieve and we have a duty to do that before we start asking people for extra money.
“But there will be increasing demands on infrastructure, |including EU demands for |improvement.
“We need to develop parts of Northern Ireland so there is at some stage going to be a need to look at how we finance all of that. It is a decision that the next Assembly will have to make.”
