Editor's Viewpoint: Corporate tax rate worth the gamble
Everyone is agreed that Northern Ireland's economy needs rebalanced. The public sector occupies far too dominant a position, chiefly because the private sector is too small.
The peace process, devolution, and the creation of a power-sharing administration have all contributed to creating a much more positive image of the province abroad. However, turning that image into concrete inward investment is proving to be a painstakingly slow job, with every gain being offset by loss of existing jobs as the recession continues to bite.
That is why it is important to add to the incentives to entice new investors to Northern Ireland. The significant differential in the corporation tax rate between the Republic and the province greatly disadvantages this part of the island. While it is not a silver bullet to cure all our economic woes, lowering the corporation tax rate here would at least level the playing field across the island and make it easier to woo new companies.
The argument for lower corporation tax has long been won, yet the Treasury continues to drag its heels on the issue. The latest projection is that it will be sometime during the summer before a decision is made on whether or not the Stormont Assembly will be granted this tax-varying power. Against that backdrop, it is very encouraging that politicians and business leaders are combining to bring their case directly to Westminster today.
The importance of top business figures pressing for lower corporation tax cannot be over-estimated. These are hard-headed entrepreneurs who can see the advantage to be gained and if they think it is a good idea, then inward investors are likely to take the same view.
Of course, there are some risks. Initially the block grant will be reduced and the tax take from existing businesses will also fall. But experience in the Republic - albeit in stronger economic times - showed those shortfalls can be more than compensated for by increased investment which will result in increased revenue to the Government in the longer-term. Sometimes gambles have to be taken to change the economic game.