Our message to the PM: we need a business tax cut now
Published 26/03/2013 | 04:20
Dear Mr Cameron,
The gravity of your meeting today with Northern Ireland's First and Deputy First Ministers should not be underestimated.
Peter Robinson and Martin McGuinness are heading to Downing Street to once more press the case for devolving corporation tax-setting powers to Northern Ireland, a subject which has uniquely brought together the support of nearly all of Northern Ireland's politicians and business leaders.
An opportunity like this, one which has the potential to be a game changer for our tired economy, doesn't come along very often and we urge you to help Northern Ireland stand on an even footing with its nearest neighbour at the market for inward investment.
That's all we ask, to be given the chance to compete on a level playing field where the corporation tax we pay is the same as that for our nearest neighbour.
There's no doubting we need a clean competition.
For proof of that you only need to look at the latest jobs numbers released on Budget day last week which showed we have backtracked to 1998 in terms of the number of people out of work within these shores.
When it comes to 18-24-year-olds, the picture is even bleaker with nearly one in four of our young people out of a job, a level which is higher than the European Union average. Bear in mind that is a benchmark which includes the likes of Spain and Greece, regions which have borne the brunt of the meltdown in the eurozone financial system.
Of course that shouldn't come as much of a surprise given we in Northern Ireland retain a land border with an EU nation, a unique characteristic which no other UK region possesses.
The term 'possess' is carefully chosen rather than 'enjoy' in the last sentence because although it provides our companies with huge export opportunities – 24% of all our goods and services find their way to buyers south of the border – this geographical feature has in fact put us at a disadvantage when it comes to business and is something of an achilles heel in our economic development.
At its most basic that is because businesses in the Republic are able to enjoy a 12.5% corporation tax rate while we currently pay 23% large business tax.
There are obvious disadvantages for our indigenous companies when trying to compete next door to a cheaper tax regime but the main drag for Northern Ireland comes when we're selling ourselves abroad.
When our companies and, increasingly, politicians head off around the world to try and attract foreign direct investment from multinational companies they are armed with an envious arsenal of positives including a highly skilled and motivated workforce, low cost of living and high-speed and reliable connectivity.
But they are also hamstrung by the issue of corporation tax.
Given the choice of stationing themselves north or south of the border, any right-thinking chief executive would plumb for the region where his or her tax bill is going to be smaller.
Chancellor George Osborne's plan to reduce corporation tax across the UK to 20% announced in the Budget has been warmly welcomed but we here in Northern Ireland need the Treasury to allow us to go further so we are at least competing with our nearest neighbour on a level playing field.
If we can do that then we will be able to reverse the slide in our contracting job market and transform our public-sector heavy economy into one filled with dynamism and driven by a red hot private sector.
The costs of devolving Northern Ireland's corporation tax have already been thrashed out and, when viewed not as a 'price' but as a transfer of funds from the private to the public sector, make sense.
Despite the evidence, there is no denying that granting the devolution of Northern Ireland's corporation tax-setting powers would be a ground-breaking move but in no way should it be seen as risky, either from a public purse or political point of view.
Difficult times require strong and imaginative leadership and now is the time to act.
Left much longer, the Northern Ireland economy may not have the resources to survive and will once again become the weed on the underside of the UK's economic hull.
Devolve corporation tax-setting powers now and we'll be able to sail under our own fair wind.
Yours sincerely, the Belfast Telegraph