Editor's Viewpoint: Tax plan is only option on the table
Published 08/08/2012 | 08:00
Eamonn Donaghy is a respected financial expert. He knows how business works and what makes a location attractive to inward investors.
His views on the necessity to cut corporation tax to lure companies to Northern Ireland are compelling. Two days ago we learned that 11,000 jobs in private companies have been lost here in the last two years. The economy is in stagnation and there are certainly no signs that it is about to enter a growth spurt.
The private sector here, even at its strongest, is too small. Yet no one has any persuasive arguments - outside of lowering corporation tax - on how to attract more entrepreneurs. Yes there are risks in cutting the tax rate. We will have to pay for it out of the block grant from Westminster and it could be some time before we start showing a gain. Success is not guaranteed, but what are the options?
Doing nothing, retaining the status quo, is not viable. Grant aid to inward investors from the EU is about to be phased out.
Why would anyone then want to come here when they could locate just a few miles away across the border in the Republic and pay half the rate of corporation tax?
Lower corporation tax has worked as an incentive not just in the Republic, but in other countries as well. Do we really have a choice?
Negotiations on how much we would lose from the block grant in return for this tax varying power are stalled at the moment, but that is not an insoluble problem.
Of course the Treasury is taking a hard line and, of course, our finance minister wants as soft a landing as possible.
However compromise is possible and should be sought as a matter of urgency. Mr Donaghy has been described as a 'Tory b*****d' for his forthright views - an unusual term of insult in this province. But his critics have no alternative plan to the current policy of dependency on the generosity of Westminster. And that is unsustainable.