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Finance Minister Murphy rules out corporation tax cut in Northern Ireland


Finance Minister Conor Murphy

Finance Minister Conor Murphy

Photopress Belfast

Finance Minister Conor Murphy

Finance Minister Conor Murphy has ruled out a cut in corporation tax.

He said it was not something he was "actively pursuing" but the possibility could resurface in the future.

The minister also said the political landscape had changed over the period since its possible introduction was first raised.

The Northern Ireland budget faces huge gaps in funding with health, education and infrastructure all faced with huge immediate demands for cash injections to ease financial pressures.

The Executive is battling with the London government for funding. Mr Murphy said the £2billion package put on the table following the restoration of Stormont's institutions and pledge in the New Deal, New Decade deal was "woefully inadequate".

The Treasury has suggested Northern Ireland political leaders look at ways to raise revenue through current powers available to them. It is also closely monitoring how money is spent in Northern Ireland.

Corporation tax was devolved to the Assembly in 2015. However the move was subject to the Executive demonstrating its finances were on a "stable footing". It has been argued Northern Ireland could better attract jobs if its rate was closer to the Republic's 12.5%.

The Executive would have to make up any reduction in revenue raised through a cut to the bloc grant - which pays for all NI's public services. It is estimated the cost would be around £240million.

Former chancellor George Osborne had pledged to cut the rate for the whole of the UK down to 17%, however, Prime Minister Boris Johnson ruled it out last year meaning the rate will remain at its current level of 19%.

Speaking to the BBC, Conor Murphy said cutting the rate was not being pursued. He said an impact assessment of its reduction to the local budget was vital before it could be implemented and he was not "actively pursuing" it. He said it had to be affordable.

"The issue probably has, in given Brexit, and given the change in economic and political circumstances, reduced.

"That's not to say that others may not raise it again but it's not something that I'm actively pursuing."

He said there was a bigger difference in the rate between the UK and Republic when it was first proposed.

The Sinn Fein minister said he wants to consider what other tax powers could be used to raise funds.

The Assembly does have competence to introduce "new taxes" - those which do not exist in GB.

Water charges and student tuition fees were mentioned as possible place money could be raised. However, Sinn Fein has ruled this out.

The economist Esmond Birnie says the only only tax the Assembly currently controls which could be used to raise more revenue is the Regional Rate.

That raised about £640m in 2019/20, or about 5% of the total recurrent and capital spend across the Northern Ireland departments.

"The case for greater fiscal powers includes the use of tax changes (cuts) to promote certain economic sectors and the possibility that linking decisions about spending to ones about taxing would improve accountability and the quality of decision-making," he said.

"There are risks too - the tax policy of a regional assembly might show undue preference to local vested interests, though it is not unheard of for national governments to fall into such a trap.

"Tax cutting agendas will tend to be most popular with politicians and their electors, but of course what we are currently thinking about is the possibility of revenue increases."

He suggests that while ending prescription charges, free public transport for 60 to 64 year olds, charging for public sector workers' car parking spaces, introducing road charges, increasing tuition fess and increases to rates would raise relatively small sums of money, combined it could be significant.

"For sure, these are not easy choices but real politics is about priority setting and trade-offs," he said.

"With hindsight it would have been better if Stormont had been given wider fiscal powers - that would have been true back in 1921 and again at the time of the 1998 Agreement."

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