David Cameron urged: cut corporation tax in Northern Ireland alongside bailout
David Cameron’s Government is being urged to cut corporation tax in Northern Ireland alongside its bailout help for the Republic.
The UK Government is preparing to loan up to £7bn to its Irish counterpart as part of the international package to ease the South’s financial crisis.
But Stormont First Minister Peter Robinson is among those pointing to the potential unfairness for Northern Ireland, given the Republic’s much more competitive corporation tax rate.
It means UK taxpayers’ money is being used to help kickstart an economy that has a major tax advantage over a region of the UK on its border.
Corporation tax — levied on company profits — is as high as 28% in Northern Ireland and elsewhere in the UK.
In the Republic the rate is 12.5% and Dublin ministers have so far rejected suggestions it will have to be raised as a condition of the international bailout.
A London Treasury minister visited Stormont yesterday to brief Assembly leaders on the assistance being offered to the Irish government.
UK Treasury Financial Secretary Mark Hoban was pressed about the corporation tax issue during discussions with the First and Deputy First Minister.
A Treasury paper on mechanisms that could be used to allow the Northern Ireland Executive to reduce corporation tax is due out by the end of the year.
Mr Hoban yesterday said the UK loan of around £7bn to help
the Republic's economy was in British interests and would help avoid economic damage in Northern Ireland.
Commenting after the discussions, Mr Robinson said: “The financial crisis in the Republic of Ireland is of great concern to us all. There can be no doubt that the situation with the Irish economy has the potential to have a knock- on effect in Northern Ireland.
“We have used this opportunity to voice our concerns, in particular with regard to the issue of corporation tax, to the Treasury.”
Mr McGuinness said: “We sought and received assurances that the Treasury and NIO are actively considering mechanisms through which the Executive could reduce our corporation tax rate.
“We are greatly encouraged by these assurances and look forward to receiving further details in the coming weeks.
“Both economies on this island are intertwined.
“It is vital that the South receives every assistance available to ensure economic stability throughout the island.
“Today's meeting provided an opportunity to discuss the issues surrounding the support package with the Treasury.”
Mr Hoban also held discussions with DUP Finance Minister Sammy Wilson, his party colleague Enterprise Minister Arlene Foster and Secretary of State Owen Paterson.
Earlier this week, Ms Foster called for conditions to be attached to any loan to ensure that a consolidation of the Republic's banking sector does not cause further financial sector job losses in Northern Ireland.