The impact of a corporation tax cut has been discussed on a macro economic basis but what does it mean on a micro level? In the first of a series of interviews, BDO Northern Ireland speaks to businesses to find out
With almost 200 working at their headquarters in Belfast, Delta Print & Packaging is a prime example of a successful Northern Ireland export-driven business. The company has associated business in China and India and supplies a range of of well-known brands.
Chairman Terry Cross founded the business himself and it has remained in west Belfast, an area of relatively high unemployment, since its establishment.
Terry describes the packaging industry as mature, oversubscribed and with a diminishing local market.
"As manufacturing exits the UK and moves to emerging markets like China and India, so too do our customers. More and more packaging facilities are located in the areas where products are made," he said.
The packaging industry is therefore seeing increased competitiveness in Europe from companies from other regions which operate in lower tax regimes and have the benefit of higher subvention.
Delta Print & Packaging is forced to compete against these companies with the impediment of a higher tax regime.
To combat the shifting of the market and increased competition, the devolution and lowering of corporation tax is vital if jobs and investment are to be retained here, says Terry.
"The business environment in the UK and Northern Ireland is not as friendly as the new emerging markets. The UK, and especially Northern Ireland, can sometimes be seen as a cold house for capital," he said.
"Capital resources go where they are welcome and Northern Ireland needs to combine political stability with lower tax and a clear investment horizon if we are to grow the private sector."
Reducing corporation tax is a crucial step which will help local businesses grow, encourage investment from abroad and act as a sign of attitudinal change in Northern Ireland, something Terry says is vital.
"A reduction in corporation tax will potentially provide a higher return on investment whilst reducing downside risk.
"Delta Print & Packaging has maintained a policy of reinvestment over the 30 years since its inception.
"A reduction in corporation tax will help boost necessary reserves for investment in essential technology and knowhow. Such investment is crucial to enable the company to create, maintain and develop high quality, skilled, indigenous employment."
Terry is sanguine regarding the outlook for the company and says it is difficult with no expectations that it will get easier.
He is clear that a reduction in corporation tax will mean more jobs in Northern Ireland.
"At the moment we have potential plans for expansion in Belfast and Europe. There is no question that if we see a reduction in tax it will mean we can increase our employment numbers," he said.
And what is the secret that could make Northern Ireland a location for international business to locate? "We need to have a compelling attraction for foreign direct investment and a politically generated environment that will encourage and reward sustained investment by both foreign and indigenous organisations.
"A reduction in corporation tax will go a long way to ensuring this is the case, although decisive action is required now."
We need to have a compelling attraction for foreign direct investment and a politically generated environment to encourage ... sustained investment