Belfast Telegraph

Editor's Viewpoint: We can't be left up in the air over tax

Differing taxation policies between the UK and the Republic of Ireland can impact negatively on Northern Ireland.

Firstly it was corporation tax which is levied at a much lower rate across the border making it a more attractive destination for inward investors. Now the punitive air passenger duty is threatening a vital link between the province and the US. One multi-national pharmaceutical company, Almac, which is based here, says the loss of direct flights by Continental Airlines from Belfast International Airport to Newark would have a devastating effect on its business.

Businesses which sent employees frequently to the US are tempted to switch to Dublin where the passenger duty is a mere €3 per head compared to £60 on this side of the border. Inevitably Continental cannot sustain a continuing drain on passenger numbers seeking better value across the border.

When the Chancellor George Osborne visited Northern Ireland in June he accepted that this was a vexed issue and that it posed a threat to our fragile economy given our geographic position which makes air travel imperative and the proximity of Dublin with its lower rates. But understanding our plight does not solve the problem and our political leaders must continue to pressurise the Treasury to remove - or at least lower - the high rates of passenger duty.

This is not a case of special pleading. The concern of Almac over the impact on its business shows that the threat to the economy is real. The outlying Scottish islands have already been exempted from aviation tax because of their location and reliance on air transport. Our case, with a neighbouring economy able to undercut our tax rates, is equally, if not more, compelling.

Not only could we lose a vital link across the Atlantic but it could damage the fortunes of local businesses and the International Airport. Also it would damage our reputation as a location for inward investment. The Treasury in all good faith should act swiftly to change this levy.

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