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Scotland is 'elephant in the room' in corporation tax debate

By Tom Moseley

Scottish independence is the "elephant in the room" in the debate over Ulster’s corporation tax rate, the Government has said.

New minister Mike Penning said Alex Salmond would try to exploit any gesture made by Westminster towards Stormont, and stressed the need to “smash” the referendum.

His comments highlight the fact that political and constitutional as well as financial barriers face the policy, which Northern Ireland’s business leaders are lobbying hard for.

Corporation tax has been described as “the only game in town” for Northern Ireland’s economy — but Mr Penning said it was vital to have alternative options.

He said: “We will push as hard as we can. I think going into a negotiation when you have only a Plan A is a difficult negotiating position to go into.”

However, Mr Penning said: “This is not just about Northern Ireland, it’s about the Union, and the tax system inside the UK.”

He added: “Scotland is going for a referendum on the break-up of the Union.

“As a unionist, I will do everything in my power to make sure we do not just win the referendum, we smash it for the next generation of people.

“I fully accept that corporation tax is of massive importance to the people of Northern Ireland, but it’s not a silver bullet. There are myriad ways in which Alex Salmond would be able to utilise the argument. What we do not want to do is to help give momentum.”

Mr Penning was speaking to the Belfast Telegraph after a debate on Northern Ireland’s economy at the Conservative Party conference in Birmingham.

There are fears that the coalition may deem it politically impossible to hand corporation tax to Northern Ireland at such a sensitive time for the UK.

Speaking after meeting Secretary of State Theresa Villiers and Mr Penning at the conference, Glyn Roberts, of the Northern Ireland Independent Retail Trade Association, said: “It seems to have become much more a constitutional issue than an economic one.”

At Tuesday's event, organised by peace and reconciliation group Champ, Ms Villiers said devolving corporation tax would be “a significant constitutional event”.

Enterprise Minister Arlene Foster, who was on the panel, said Northern Ireland would not be restricted to matching the Republic’s rate if it was devolved, saying a 10% tax would be considered.

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The Scottish independence referendum represents a political headache for supporters of Northern Ireland corporation tax devolution.

Alex Salmond could demand the same powers and use it in his argument for a ‘yes’ to independence vote.

But Finance Minister Sammy Wilson hopes a successful handing over of the power to Stormont could “undermine” the SNP’s independence case.

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