Northern Ireland business chiefs demand corporation tax control
Business leaders have demanded the immediate devolution of corporation tax powers to Northern Ireland following the No vote.
The Treasury is widely expected to make a positive decision on devolving the power, which has been hailed as a panacea for businesses here.
Stormont wants to reduce its rate of corporation tax, a levy on business profits, from the UK-wide 20% to match the 12.5% tax rate in the Republic of Ireland – one of the lowest in Europe. This is likely to cost more than £200m a year, which EU rules stipulate must come from the Assembly's budget without subsidy from London.
All of Northern Ireland's main business organisations and the Executive parties agree that this power should be devolved.
Last year the Prime Minister delayed a decision on the issue until after the referendum. Now, Northern Ireland's companies have called for immediate action on his promise to give more control over taxes, spending and welfare to each of the UK's four nations.
In the last few months the Treasury and HMRC officials have carried out considerable work on the mechanics required to enable the devolution, according to Eamonn Donaghy, head of tax at KPMG.
He said: "Whilst the PM still has to formally decide, it is difficult to see how his answer can be anything other than to proceed with devolving this power.
"The NI business community is ready for a positive decision and will want to see the immediate use of this power to set a date for the reduction in the NI corporation tax rate."
Business leaders hope that a long-term, stable, low tax rate will encourage long-term investment from both local and foreign sources.
Glyn Roberts, chief executive of Northern Ireland Independent Retail Trade Association, said: "Now that the Scottish referendum is behind us the NI Assembly needs to redouble its efforts to resolve the welfare reform issue and ensure the swift devolution of corporation tax powers to enable the NI Executive to make the step change to boost our economy."
Paul Henry, chairman of Chartered Accountants Ulster Society said that if the devolution of corporation tax was approved, it "would strengthen our hand internationally".
Concern has, however, been expressed on the matter of further devolution. John Cridland, director-general of CBI, cautioned that "it is important that it does not undermine the strength of the single internal market".
It is unclear how the increased devolution of fiscal powers would affect the redistribution of resources from England to the other nations, calculated under the Barnett formula.
Economist John Simpson said: "The referendum has now put the major reshaping of the Barnett formula firmly on the agenda. The Barnett formula in the past has worked to Northern Ireland's advantage but the fear must be that the changing allocation of responsibilities could actually mean that Northern Ireland has great difficulty in maintaining the present favourable position."