| 6.1°C Belfast

Corporation tax is top election issue for firms

Achieving a special corporation tax status for Northern Ireland is the key Westminster election issue for local businesses, the Business Telegraph can today reveal.

With just 48 hours before the polls open, 35% of firms here are looking to the political parties who are focused on achieving a special corporation tax status for the province.

That is good news for DUP, UCUNF, SDLP and Alliance who all make mention of it in their manifestos.

  • DUP states “We have a particularly strong case in Northern Ireland for a reduction in corporation tax”.
  • SDLP vows to continue to fight for an all-island rate of corporation tax
  • UCUNF says “A Conservative and Unionist Government will produce a Government paper examining the mechanism for changing the corporation tax rate in Northern Ireland”.
  • Alliance “supports the call for a differential rate of corporation tax for Northern Ireland, ideally at 12.5%”.

Although no parties, with the exception of Alliance, explain in their 2010 manifestos how such a huge shift in fiscal policy would be achieved. Alliance states that it “accepts that lost revenue in the short term from a lower rate of taxation would have to be met from the Northern Ireland Block Grant. This is estimated at around £200m”.

The exclusive findings are laid bare in a Goldblatt McGuigan survey, which quizzed 168 businesses across Northern Ireland last week.

Investing in major infrastructure/ capital projects and making the public sector more efficient are also high on the agenda for Northern Ireland companies.

Glyn Roberts, chief executive of Northern Ireland Independent Retail Trade Association (NIIRTA), says: “Reducing corporation tax for Northern Ireland is the one issue on which they (local political parties) all seem to agree.

“There is no doubt that more Foreign Direct Investment (FDI) for Northern Ireland as a result of a lower corporation tax rate would be a win-win for both creating new jobs and the knock-on effect this would have on our indigenous small businesses and local retailers.”

Wilfred Mitchell, policy chair, Federation of Small Business (FSB), adds: “We welcome pledges on corporation tax (TUV, SDLP, UCUNF, DUP, Alliance).”

Kieran Patterson, CEO of Dunmurry-based Lighstep Technologies, a successful SME, also believes any reduction in corporation tax would “go towards the regrowth of our economy”.

However, Neal Lucas, managing director of Neal Lucas Recruitment is not convinced lower corporation tax is the solution for the problems facing the local economy.

“All parties are united in the view that corporation tax should be reduced as an incentive for more new industries to locate here, however, it is definitely not the golden ticket to mass job creation we are led to believe.”

Bro McFerran, who heads up Allstate, one of Northern Ireland’s Top 100 Companies, is also sceptical about such a move.

He said: “Such a move has already been ruled out by the Treasury and is unlikely to introduced given the declining state of public finances. In addition, the Republic shows that low corporation tax is no panacea - maintaining high productivity is an effective way to stimulate and sustain economic growth.”

Those comments are backed up by Ann McGregor, chief executive of Northern Ireland Chamber of Commerce (NICC). She comments: “While DUP, SDLP, UCUNF and Alliance pledges to reduce corporation tax look good on paper, this has already been ruled out by the Treasury so our ideas need to be stronger.”