Stormont 'should set own tax rate'
Giving Stormont the right to set the rate of corporation tax could provide Northern Ireland with a major weapon in the fight to create jobs, the Secretary of State has said.
Finance Minister Sammy Wilson fears that under European rulings, if the Executive takes on the tax-raising control it will be obliged to lose £300 million of its Westminster block grant.
But Secretary of State Owen Paterson has now asked local ministers to consider the wider benefits of what he believes could be a "massive marketing tool" to attract overseas investment.
Lobbyists who want Northern Ireland's 28% corporation tax rate cut to compete with the Republic of Ireland's famously low level of 12.5% have argued the measure could be phased in to ease any burden until Stormont begins to see a return on the tax change.
Mr Paterson said: "My hope is that people would see this as an opportunity to invest for the future. This would be a massive marketing tool. We could say: Come to Northern Ireland, we've got one of the lowest rates in Western Europe."
He said the region also boasted many of the additional features necessary for economic success, including good international connections, a skilled workforce and respected universities.
Executive ministers are studying a Treasury paper on how the tax change could be handled.
The Secretary of State said: "The basic facts are, if we can get this through, and we've got to persuade the Treasury and we've got to persuade the European Commission, so we have got quite a long way to go on this, but bluntly, we won't get there if we don't have enthusiasm from Northern Ireland."
Tax expert Eamonn Donaghy, of the independent Northern Ireland Economic Reform Group which backs corporation tax changes, said the grant aid negotiations pointed to the growing need for Northern Ireland to plan for the decades ahead.
"The Republic of Ireland does very well in this area, much better than us. So what does the Republic of Ireland have that we do not have? Why are factories basing in Dundalk, and not across the border?" He said the key difference was a lower rate of corporation tax and warned Northern Ireland ministers against binning the Government proposals at such an early stage.