Belfast Telegraph

Stormont has left us staring into abyss, say business chiefs

Fury at Executive as tax powers transfer is thrown into limbo

By Jamie Stinson

Stormont has left the business community staring "into the abyss" over devolving corporation tax after the collapse of welfare reform.

Northern Ireland business leaders have been left bitterly disappointed after Sinn Fein withdrew support for welfare reform, leaving the decades-long battle to allow the region to set its own corporation tax in limbo.

And Secretary of State Theresa Villiers said the future of the tax power was "in jeopardy".

Agreeing a way forward on welfare reform was one of the key areas Stormont had to make progress on, ahead of devolving corporation tax powers.

It's predicted a lower rate could attract a flood of big-name international firms to set up shop here.

Politicians from all five parties, along with Ms Villiers, met to negotiate over the issues yesterday.

First Minister Peter Robinson and Deputy First Minister Martin McGuinness are both in New York meeting with potential investors.

Ann McGregor, chief executive of Northern Ireland Chamber of Commerce, said: "It is disappointing that the Execu tive appears to be heading towards another crisis which may undermine the devolution of corporation tax."

The corporation tax bill has passed through the House of Commons and is currently at first reading in the House of Lords.

In less than three weeks Parliament at Westminster will dissolve for the general election, and if the Bill has yet to receive Royal Assent, it leaves corporation tax in a state of uncertainty.

A lower rate of corporation tax would be most attractive to firms with high costs, including manufacturing, research and development, and technology companies.

Eamonn Donaghy, head of tax at KPMG Belfast, said: "We have the real risk here of throwing the baby out with the bath water.

"The impact from the business community's perspective is the possibility of missing a significant opportunity."

Mr Donaghy said corporation tax and welfare reform should "never have been linked".

Doubt has now been cast over the future of the tax power.

Mr Donaghy added: "At the end of the day if the Stormont House agreement is torn up, where does that leave us?

"Political stability is what everyone craves.

"This is a good place to invest, but not if you don't know what will happen over the next couple of years."

A call for political stability was also echoed by CBI Northern Ireland director, Nigel Smyth.

"The visit of the First and Deputy First Ministers to the United States is a critical moment in showing to the world Northern Ireland is open for business and investment," he said.

"But investors will want to know that we have political stability and an Executive that can manage its finances."

After Sinn Fein withdrew its support for welfare reform, it cast doubt on the future of the transfer of corporation tax-setting powers to Stormont. With the dissolution of Parliament on March 30, if the bill is not passed in that time it is uncertain whether corporation tax will have the support of a new government.

Belfast Telegraph