Belfast Telegraph

Corporation tax powers may be handed to Northern Ireland, hints Cameron

By Liam Clarke

The Prime Minister has given his strongest hint yet that new powers to set corporation tax rate in Northern Ireland will be announced in less than two weeks.

But David Cameron also warned that this depends on the Executive parties sorting out a budget.

Secretary of State Theresa Villiers is due to submit a progress report on the five-party negotiations to the prime minister a few days before the announcement, expected on December 3 - something that could prove crucial to his final decision.

Mr Cameron's comments on corporation tax back comments made by Peter Robinson in yesterday's Belfast Telegraph.

Yesterday Mr Cameron told the Commons Liaison Committee that the argument for devolving the business tax to Northern Ireland was "strong".

He said the case here was different from elsewhere in the UK because of the land border with the Republic of Ireland where the rate is 12.5%. It is 21% throughout the UK but Mr Cameron intends reducing that to 20% before powers would be devolved to Stormont.

He said an announcement one way or another was due in the Chancellor's Autumn Statement, is scheduled for December 3.

Laurence Robertson, the chair of the Northern Ireland Select Committee, asked Mr Cameron whether devolution of corporation tax depended on MLAs resolving their budget problems.

The Prime Minister said the two issues were linked, arguing that it was difficult to argue for more taxation powers at a time when the Executive was not able to balance its current budget.

He also indicated that the wanted to see tax dodges in the Republic closed through international tax agreements.

Mr Cameron was also asked about the Barnett Formula used to calculate how much the regions are subsidised from the Treasury.

Many English Tories resent it because they believe it gives regions like Northern Ireland and Scotland an unfair advantage.

However, the Prime Minister was clear that reform of the Barnett Formula was not "on the horizon" at present.

He denied that ending Barnett would produce a "pot of gold" for England because of the high population there, 55 million compared to six million in Scotland and 1.8 million here.

He also predicted that the formula would become less important as more powers were devolved. This is because loss of revenue from devolved taxes is deducted from the block grant.

The aim of the exercise, from London's point of view, is to encourage devolved regions to depend more upon their own resources and less on allowances from Westminster.

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