Tax cut could be a game-changer
The complex topic of a possible reduction in corporation tax here has resurfaced after months of lying dormant. The latest indications are that Westminster is likely to devolve these powers to Stormont by the autumn.
Nothing is certain, as yet, but when the Finance Minister Simon Hamilton says that he is optimistic about a positive reply from the Prime Minister, it is time to sit up and take notice.
A possible reduction in our corporation tax is one of those complex issues which may be understood by experts, but which remains a mystery to most people.
Nevertheless the implications for everyone in Northern Ireland are profound, and a reduction in corporation tax here could set the pattern for our economic future for years to come.
A lower corporation tax of some 12.5% would be in line with that in the Republic, and would be significantly lower than our current rate of 20%. Obviously this could be a significant factor in attracting much greater international inward investment.
In theory, this could help to revitalise our economy, reduce our reliance on public spending and increase wages by bringing in the top companies.
The lower rate has worked well in the Republic, where it remains crucial to the Irish economy which, despite the demise of the Celtic Tiger, is still more dynamic and diverse than ours.
On the downside, a cut in corporation tax here would create a reduction in income of some £250m-£320m annually, which we would need to meet from our own resources.
This would present a major challenge for our politicians, who have spent far too long quarrelling about such crucial financial issues as welfare reform.
However, if all went well a reduction in the corporation tax could become an economic and fiscal game-changer.
In a competitive world, economic changes are inevitable, and the implications of the Scottish referendum show that regional corporation tax variations may become part of a new fiscal framework.
Any change in the rate of our corporation tax will take time to work out, but the bottom line is clear for Northern Ireland.
We badly need to be less reliant on the public sector, especially at a time when increasing cuts seem inevitable, and we must do all we can to help our business sector create greater prosperity all round.