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Farry warns on corporation tax

Published 13/04/2015

Stephen Farry told MLAs a common regime would be better than a race to the bottom
Stephen Farry told MLAs a common regime would be better than a race to the bottom

Northern Ireland should not try to undercut the Republic's lower rate of corporation tax, the Employment Minister has said.

Stephen Farry told MLAs a common regime would be better than a race to the bottom.

He said: "It would be foolish for us to try to have a race to the bottom of trying to undercut the rate in the Republic of Ireland because they simply would just move to match us.

"I think there are advantages of having a common regime on the island and then we can both compete based on our other strong attributes in our respective jurisdictions."

Mr Farry was speaking during Question Time.

He told Assembly members that a reduction from the current 21% rate to 12.5% from April 2017 could lead to the creation of 38,000 new jobs by 2033.

However, the Alliance Party MLA warned that, despite huge pressures on the Executive budget, investment in skills was essential.

"It is important that the full House understands the importance that if we are to go down the route of lower corporation tax that cannot be successful in a vacuum," said Mr Farry. "We have to invest in skills.

"A standstill in terms of what we are doing isn't good enough. But, we are actually at the current moment in time de-investing from our skills drivers. So, we are actually taking the wrong action if we are supposed to be planning ahead for what should be something that will give the economy a major boost here."

New legislation on the devolution of corporation tax powers is making its way through Westminster.

Supporters say the move would help the region rebalance the economy and grow the private sector.

However an arch critic of the plan, TUV leader Jim Allister, claimed: "The only certainty attaching to the devolution of corporation tax is a huge year-on-year reduction running into hundreds of millions of pounds from the block grant."

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