Assembly could set corporation tax
Published 23/03/2011 | 16:12
The Northern Ireland Assembly could take the power to set corporation tax as part of a consultation on helping the private sector grow.
The Treasury paper is due to be published on Thursday and considers the case for Northern Ireland having a lower rate of corporation tax than the rest of the UK, Chancellor George Osborne told the House of Commons. It will focus on ideas from the British Government and Northern Ireland Executive.
Companies in the region have to compete with those in the Republic of Ireland, where the lower rate of 12.5% has attracted increased foreign direct investment.
Mr Osborne said: "In Northern Ireland... the Treasury will publish a paper on how we help their private sector to grow.
"To deal with the unique issues posed by the Irish Republic's business tax regime, it considers the case for Northern Ireland having an even lower rate of corporation tax than the rest of the UK.
"I look forward to engaging with all parties there on the way forward."
One option in the consultation document was expected to be handing the Assembly the power to set its own rate of corporation tax.
Corporation tax is at 28% in the UK but only 12.5% in the Republic of Ireland. Mr Osborne announced in his Budget that UK corporation tax will be cut to 23% to stop international firms from quitting the country.
Campaigners argued that bringing the tax in line with the Republic could help invigorate the Northern Ireland economy. However, there are Government concerns any reduction would be paid for in a cut in the block grant from Westminster.
The Irish government is under pressure to raise its level of corporation tax following talks on changing the terms of the European bail-out.