Belfast Telegraph

Cutting Northern Ireland's business tax rate could lead to UK unravelling: Vince Cable

By Lesley Houston

Vince Cable has warned that cutting corporation tax in Northern Ireland could lead to the United Kingdom starting to unravel.

The Business Secretary said there were other ways to assist Northern Ireland's business community other than the "emotional issue" of slashing the rate here.

Mr Cable said reducing corporation tax was "an incredibly tricky issue" involving a "lot of problems" and "great care" would be needed from the coalition government.

Mr Cable was speaking on the Nolan show yesterday when he warned of major difficulties in reducing the rate of tax within one part of the UK.

Mr Cable, who is due to meet local companies on Monday during his third visit since taking office, was asked whether Northern Ireland deserved special treatment.

"That's an incredibly tricky issue because it raises the whole issue about whether different parts of the UK should start competing on tax rates," he said.

"We have to approach that particular issue with great care and as a government.

"We have agreed to keep open the issue of devolving future fiscal powers and we haven't closed the issue but we certainly haven't come down in favour of having a separate rate."

Mr Cable said: "We have to be extremely careful about unleashing tax competition in the UK.

"Ireland itself, the Republic, embarked on an aggressive tax-cutting strategy and that sort of helped lead them into bankruptcy and we need to be careful we don't duplicate that experience," he warned.

Supporters of devolving the tax argue that Northern Ireland is the only area within the UK with a land border – to a country with a much lower rate.

Mr Cable said: "It's one factor but other parts of the UK could argue in different ways to come to the same conclusion and, before you know where you are, the whole of the UK starts to unravel.

"We continue to look at the devolution of tax powers but there are other ways to help Northern Ireland than through the corporation tax rate, emotional though as that has become," the Business Secretary concluded.


Business leaders and politicians have united to call for the powers to set the corporation tax rates to be devolved to the Assembly. This, it is argued, would enable Northern Ireland to compete with the Republic of Ireland's rate of just 12.5%. Currently, the main corporation tax rate in the UK is 23%.

Belfast Telegraph


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