April 2018 deadline for devolving corporation tax to Northern Ireland 'may be missed'
A senior economist has said he believes next year's date for introducing a cut in Northern Ireland's corporation tax rate is likely to be missed.
Dr Esmond Birnie of the Northern Ireland economic policy centre said recent political events triggered by the Renewable Heat Incentive (RHI) scandal and revelations that it could cost £490m have made the April 2018 deadline harder to meet.
Terms for Northern Ireland to set its own rate of corporation tax in order to be able to compete more effectively with the Republic for inward investment were enshrined in last year's Fresh Start Agreement.
But Dr Birnie said: "Given that turning on the devolved power is dependent on two conditions - demonstration that the Executive has set its fiscal affairs on a sustainable footing, and having an Executive in place - it is unfortunately looking as though next year's target date will be missed."
Lowering the corporation tax rate has long been a central plank in Northern Ireland economic policy.
However, Dr Birnie said the low tax plans of incoming US President Donald Trump could also lessen the impact of a lower tax rate for Northern Ireland.
In addition, Chancellor of the Exchequer Philip Hammond has stated he will look at cutting UK corporation tax post-Brexit.
And in her key speech on the withdrawal from Europe yesterday, Prime Minister Theresa May said the Government would look at implementing "competitive tax rates".
Dr Birnie said such "external conditions have conspired to mean the beneficial impact of the planned reduction in 2018 would be much smaller than would have been the case when the idea was mooted back in 2010 or even before that".
However GROW NI, a lobby group of local business that led the campaign for corporation tax devolution, remains confident. "While the UK main rate may go down over time, there are no specifics yet, and, if changes do come about, they would take some time," it said.