Belfast Telegraph

Slash corporation tax rate business chiefs tell Wilson

By Margaret Canning

A business body has urged speedy action on cutting corporation tax after Finance Minister Sammy Wilson said a reduction was unlikely during the current Assembly term.

The Institute of Directors (IoD) said cutting the tax from the UK rate of 26% closer to the Republic's 12.5% would represent "the most fundamental change in our finances for a generation or more".

It warned that delay would hamper the province's recovery from downturn and prolong "unacceptably" high unemployment.

Chairman Mervyn McCall accused Mr Wilson of abandoning his responsibility for growth.

"If the Treasury agrees to the devolution of company tax setting powers to Northern Ireland, we accept that there will need to be negotiations over the effect on the block grant.

"But to suggest that this will go beyond the lifetime of this Assembly is simply an abandonment of the Executive's responsibility to support economic growth and to provide needed employment."

The chairman claimed cuts to the block grant were achievable. "There is expert evidence to suggest the impact on our budget would be below £250m rather than £400m."

Mr Wilson told the Assembly on Monday that negotiations would have to take place with the Treasury in autumn if Northern Ireland was to avoid a "totally unsustainable" cost for devolving the tax. He said it did not see a cut talking place until after the present Assembly, due to be dissolved for elections in 2015.

His remarks follow a letter to the Financial Times on tax by Kate Barker, the chair of the economic advisory group.

Responding to an editorial in the FT opposing devolving tax powers to Northern Ireland, which it said would entail a "heavy price" for the UK, Ms Barker argued in favour of the devolution.

It would be a "self-help" proposal as Northern Ireland alone would bear the full fiscal consequences for the change.

She said Northern Ireland needed a "significant policy shift" to compete with the Republic.

The Federation of Small Businesses (FSB) said cutting the tax was essential to get the economy back on track.

"The FSB is adamant that this tax change will be a key ingredient in helping to encourage much needed new job creation in Northern Ireland. This, in turn, will benefit the economy as a whole, helping it to recover from one of the longest and deepest periods of recession ever experienced."