D-day on horizon for corporation tax
A reduction in corporation tax rate will "put Northern Ireland on the international business map," according to campaigners for the fiscal move.
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Prime Minister David Cameron has said he will give the nod on whether tax powers can be devolved to the Assembly following the Scottish independence referendum on September 18.
And as D-Day approaches for Scotland, lead tax-cut advocate Eamonn Donaghy, head of tax at KPMG, said he did not think Mr Cameron's decision will be influenced by the outcome of the long-awaited referendum, whether Scots vote for or against breaking away from the Union.
He said that even if the the Scottish vote for the status quo, the arguments in favour of tax-cuts would not be dimmed – especially if more powers are devolved to Scotland in a form of 'devo max' in the event of a 'no' vote.
"The more powers which are devolved to the Scottish parliament, the easier it should be for the Northern Ireland Assembly to claim its entitlement to corporation tax rate varying powers," Mr Donaghy said.
The five main political parties in Northern Ireland have said they support a corporation tax cut from the present main rate of 21% to around 12.5%, the current rate of tax in the Republic.
That low tax rate is one of the reasons why the Republic has been successful in drawing investment from firms like Google and Facebook.
Campaigners say that having as low a rate of tax as the Republic will enable Northern Ireland to compete more effectively with its neighbour in attracting such blue-chip companies. But following a European court ruling, lost revenues from a tax cut would have to be recouped from the Executive's own budget.
Mr Donaghy said: "It is difficult to envisage why the Prime Minister would ignore the wishes of a majority of the people in Northern Ireland, especially if the cost associated with reducing the corporation tax rate would have to be paid for by the Northern Ireland Assembly."
Grow NI, a consortium of business bodies like the CBI and IoD all in favour of a tax cut, have said they believe a lower rate of corporation tax will lead to increased investment, higher productivity and greater levels of employment.
It quotes an estimate by the economic advisory group (EAG), set up by Enterprise Minister Arlene Foster, that 58,000 new jobs could be attracted to Northern Ireland by 2030 if the rate of corporation tax is lowered.
Opponents to the proposal say it could led to 'brass plating' – with companies setting up nominal operations in Northern Ireland without actually employing large numbers.
GROW NI is writing to members restating its case – but the anti-cut lobby is sticking to its guns. Richard Murphy said a tax cut would be a "disaster" for the province.