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Corporation tax deal in the hands of PM: Robinson

By Tom Moseley

After months of painstaking negotiations, finger-pointing and intense lobbying, the fate of Northern Ireland’s corporation tax dream is now in the hands of David Cameron.

A final attempt to reach agreement between the Northern Ireland Office, Stormont and the Treasury on the terms of devolving the power failed to settle the matter yesterday.

A list of options will be drawn up, and handed to the Prime Minister — who could make his decision within a month.

The First and deputy First Ministers, Treasury Minister and Secretary of State Theresa Villiers all agreed progress had been made during the 90-minute talks.

But with the Scottish Referendum likely to weigh heavily on Mr Cameron’s mind, the Northern Ireland representatives all agreed that the debate had boiled down to politics, rather than economics.

“It is a step in the right direction, but ultimately the final decision will be taken by the Prime Minister,” First Minister Peter Robinson said. In one final attempt to sway the decision towards devolution, Mr Robinson and Martin McGuinness will arrange a meeting with Mr Cameron in the coming weeks.

Mr McGuinness said the difference between the 12.5% rate in the Republic and the UK’s 24% caused “massive difficulties”.

A deal could be announced by Chancellor George Osborne on December 5. But the “crunch” decision for Mr Cameron surrounds the “secondary impacts” of the change, Finance Minister Sammy Wilson told the Belfast Telegraph.

Crucially, this concerns who gets to keep the extra income tax and national insurance revenue that could be generated by a cut to the region’s corporation tax rate.

The cost to Northern Ireland’s block grant in future years, once the power has been devolved, has also yet to be settled.

What now?

The barriers to Northern Ireland getting its own rate of corporation tax are both economic and political. On the economic front, Mr Cameron will be asked to decide what would happen to any extra tax receipts generated as a result of a corporation tax cut. The effect of the change on future years’ block grants has also yet to be determined.

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