Belfast Telegraph

Lower tax rate 'is dead in the water'

An economics expert has said that a new campaign to introduce a lower rate of corporation tax for Northern Ireland has been "dead in the water from the outset".

Tax commentator Richard Murphy spoke after seven business organisations wrote to MLAs and to Secretary of State Owen Paterson to demand a lower figure for Northern Ireland.

The UK rate is currently 28% compared to 12.5% in the Republic of Ireland.

Mr Murphy, who runs the website Tax Research UK, said that the move would turn Northern Ireland into a tax haven but would add nothing to the local economy.

"The CBI said in evidence to the House of Commons a couple of weeks ago that they couldn't guarantee a single new job as a result of lowering corporation tax - I don't think anybody could say they could guarantee a single job out of it," he said.

"People say that such a move would create a 'profit centre' - actually, I call it a 'tax haven'."

He said there was an unfounded perception that the Republic's low rate had generated jobs.

"The lower corporation tax in the Republic of Ireland has yielded very few real net jobs.

"As an Irish citizen and as someone who set up a business in the Republic back in the 1980s, I know that my reasons for choosing to locate there were based on factory access, access to grants, the quality of the people - corporation tax was fifth or sixth on my list."

Mr Murphy also cited possible administrative headaches for companies.

"Northern Ireland, Great Britain and the Republic of Ireland all having different tax rates would be a huge burden for firms operating between two or all three of those countries - people will just say 'cheerio' and go somewhere else."

He said the letter showed a lack of understanding about EU rules on corporation tax and displayed "an extremely simplistic view of a clever marketing tool which will cost £300bn from the Westminster block grant, which the finance minister Sammy Wilson has already said that he cannot afford".

"It's not a horse I would be backing," Mr Murphy said.