Low tax rate 'would benefit all UK'
Published 30/03/2011 | 17:12
English taxpayers could benefit in the long run from Northern Ireland being allowed to set a lower corporation tax rate than the rest of the UK, the government has claimed.
Northern Ireland Secretary Owen Paterson, who has championed the plan to devolve the tax-raising power to Stormont, told a Westminster committee he believed it could eventually reduce the vast sums of public money poured into the region.
He accepted the tax move might spark demands from deprived parts of England to be allowed the same job-creating tool, but argued Northern Ireland was a unique case.
Mr Paterson said Northern Ireland was burdened by the legacy of the Troubles, shared a land border with the Republic of Ireland which has a low tax rate, while three-quarters of the Northern Ireland economy was reliant on the public sector.
Pressed on the high level of economic deprivation in parts of England, he said: "I entirely agree with you. I represent North Shropshire, which is not a very wealthy part of England.
"I am fully aware of the need for more prosperity across the UK."
Chancellor George Osborne has already announced that corporation tax will be cut across the UK to 23% by 2014. But Mr Paterson is pressing for Northern Ireland politicians to grasp the opportunity to take on the power to gradually reduce their rate to compete with the Republic's level of 12.5%.
He said the move could be the "step change" needed to revive the area's weak private sector.
Mr Paterson said Northern Ireland citizens receive more per head from the public purse than their English equivalents, and argued that developing the region's economy could reduce the disproportionate burden on the Treasury.