Northern Ireland has more chance of getting its own low corporate tax rate if Prime Minister Gordon Brown loses the next general election, according to the think-tank behind a new report.
The Northern Ireland Economic Reform Group, an independent panel of senior economists, accountants and business leaders, yesterday launched the report, ‘The Case for a Reduced Rate of Corporation Tax in Northern Ireland’.
It argues that a cut from the current UK-wide rate of 28% to the 12.5% levied on firms in the Republic would be the best way to revitalise the region’s flagging economy and could create more than 90,000 extra jobs in the next two decades.
The group stressed it is non-political but acknowledged that it was Mr Brown as Chancellor of the Exchequer three years ago who rejected a previous campaign to have corporation tax in the province lowered.
“The fact that Gordon Brown’s tenure in office may be coming to an end gives us hope that lower corporation tax may be given greater consideration,” said Graham Gudgin from the Centre for Business Research, a member of the group.
At a press conference in the Stormont Hotel the panel also highlighted that the Conservative Party appears more open to corporation tax cuts.
Shadow Northern Ireland secretary Owen Paterson was quick to welcome the report.
“They make a very coherent case for a reduced rate of corporation tax in Northern Ireland,” he said.
“The Conservative Party has been saying for some time that a radical, long-term strategy is required to end Northern Ireland’s dependence on the public sector and to boost private sector investment.
“Northern Ireland faces some economic challenges that are unique within the United Kingdom.”
The group estimated that the local economy is currently dependent on £9bn worth of subsidies from the UK exchequer each year — the equivalent of £5,000 per person — and believes wages and employment levels will remain low unless the tax change is made.
The experts said current government policy of awarding grants to multinational companies that decide to set up here was not sustainable, especially with the prospect of tighter EU regulations limiting such support.
Lower corporation tax would help attract foreign companies that create higher value jobs than the current system and would also spur investment by local companies, it said.
SDLP MLA Alasdair McDonnell said at the launch that he would put the report up for debate in the Assembly.