Belfast Telegraph

Executive advised to press for tax powers

By Amanda Poole

Tax varying powers could help the Executive rebalance the Northern Ireland economy, a report by business advisors PricewaterhouseCoopers has said.

The firm's 'Making the most of devolution report' said granting tax varying powers which are currently exercised by Westminster to the Assembly would make the region more attractive to investors.

Options for new tax-raising powers in UK regions are contained in the coalition government's first programme for government.

Dr Esmond Birnie, PwC chief economist in Northern Ireland, said: "Offering Northern Ireland Enterprise Zone status and tax-varying powers would underpin the findings of the recent Independent Review of Economic Policy (IREP) and could make the region more attractive to overseas investors."

In July, executive minister Arlene Foster confirmed 21 potential investors had located in the Republic, despite negotiating with Invest NI because the tax regime of the Republic - where the rate of corporation tax is 12.5% instead of the UK top rate of 28% - was more attractive.

As Northern Ireland faces unprecedented cuts in public spending, Dr Birnie says the regions could benefit from having tax-raising powers.

He called the proposals a "once-in-a-lifetime" opportunity for the Northern Ireland Executive to negotiate for devolution of tax-raising and tax-varying powers.

He added that the Government will address the extent to which MPs from the devolved regions have a say in English affairs, known as the West Lothian question.

"Scotland and Wales are already looking at the advantages greater devolution could bring and the Executive should make that a priority by working with their Scottish and Welsh counterparts to exploit every advantage to make devolution real."

Dr Birnie said the Government has specific proposals to let the Executive cut corporation tax, but much broader tax-varying powers, including the ability to set and raise new taxes within the region, could also be negotiated.

The existing Barnett Formula used to calculate funding for the regions could be overhauled to allocate grants based on need rather than on population size and the report also indicates the number of Westminster MPs could also be reduced.

Mr Birnie said: "If the way the block grant is allocated and the influence of MPs at Westminster are both to be reviewed, then the Executive should also negotiate hard for accelerated regional devolution."

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