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Corporation tax cut dead in water after Executive implosion, insists expert


Chris Morrow (NI Chamber), Ann McGregor (NI Chamber), Maureen O’Reilly (Economist for the QES), and Brian Murphy (BDO)

Chris Morrow (NI Chamber), Ann McGregor (NI Chamber), Maureen O’Reilly (Economist for the QES), and Brian Murphy (BDO)

Chris Morrow (NI Chamber), Ann McGregor (NI Chamber), Maureen O’Reilly (Economist for the QES), and Brian Murphy (BDO)

The collapse of the Executive because of the Renewable Heat Incentive (RHI) has "killed off" any chance of a lower rate of corporation tax, it has been claimed.

Ulster Bank chief economist Richard Ramsey said the scandal and the looming Brexit process meant the reviewed 12.5% level was "never going to happen".

He spoke as the Northern Ireland Chamber of Commerce and Industry unveiled its membership survey for the fourth quarter of last year, which found that confidence bounced back after the vote to leave the EU.

Mr Ramsey said the Fresh Start Agreement and devolution of corporation tax had required evidence of competence with finances from the Executive.

But the RHI controversy, which has been reported in English newspaper including the Financial Times, along with the resignation of the Deputy First Minister, has illustrated the opposite of that, he added.

"We have had that demonstration, albeit incompetency," Mr Ramsey explained. "That is not going to change by 2018 (when the corporation tax cut is due to be implemented here).

"US inward investment is probably not going to think about Brexit now.

"RHI is going national - we are on the front page of the Financial Times."

Martin McGuinness stepped down as Deputy First Minister on Monday, leading to a collapse of the devolved institutions and the prospect of a snap election.

Economist Maureen O'Reilly claimed many companies could be thinking about going somewhere else in light of the shocking developments.

Graham Brownlow, a research associate at Queen's University, added: "Pre-RHI it would have been easier to get corporation tax funded. Now, I don't think you have a chance of that.

"RHI was a walk in the park as a piece of economics. Corporation tax is a lot more complex."

The developments came as local businesses reported a positive end to last year, with firms experiencing an upsurge across most performance measures.

The Northern Ireland Chamber of Commerce and Industry's quarterly economic survey, with BDO, also found that around two-thirds of companies expected their businesses to grow this year, with 16% of them predicting strong growth.

However, one in five expected their firm to contract, and around 37% expected the entire economy to shrink. Fluctuating exchange rates were also highlighted, with two-thirds of respondents citing them as a major concern - an increase from the third quarter survey, which was the first after the EU referendum.

Ann McGregor, chamber chief executive, said choppy waters could lie ahead. "Our findings suggest that local businesses remain resilient as they continue to trade through the uncertainty, with many expecting continued growth in the months ahead," she added.

Other concerns highlighted in the survey included general uncertainty, the lack of a clear Brexit strategy, bureaucratic delays and the rising cost of raw materials.

Brian Murphy, partner at BDO, said that while last year was challenging, the study "points to the fact that Northern Ireland's businesses have bounced back somewhat over the past few months".

Belfast Telegraph