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MP report backs corporation tax cut

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Laurence Robertson

Laurence Robertson

PA Archive/Press Association Images

Laurence Robertson

There is a convincing case for cutting corporation tax in Northern Ireland but that alone will not solve the region's economic woes, an influential Westminster committee has claimed.

Reducing the levy on businesses from 28% to a rate closer to or even lower than the 12.5% in the Republic of Ireland will help the private sector to expand and create more jobs, according to the Northern Ireland Affairs Committee.

Giving the Stormont Executive the power to set its own corporation tax levels is one option outlined in a paper tabled by the Treasury earlier this year.

Laurence Robertson MP, chair of the Committee, which has published it own report on the issue, said: "The 12.5% rate of corporation tax in Ireland has attracted significant inward investment and a number of large companies, as well as the ability to compete better with emerging economies.

"The evidence we received from businesses, trade unions, economists and politicians formed a convincing argument for a lower rate for Northern Ireland, which could help to unlock the potential of its private sector by boosting growth, innovation and exports.

"Northern Ireland's ability to compete with other countries, and to retain expertise in its workforce, is vital for the success of its economic future and we urge the Government to examine carefully our recommendations."

But the committee said a tax cut would not be a panacea, and warned there would be considerable issues involved in implementing it, noting that UK and Irish tax systems are different and that it would have to comply with European Union (EU) rules.

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The MPs said the decision to vary the rate must be the responsibility of the Northern Ireland Executive, with receipts for corporation tax raised in the region kept there. The block grant from Westminster would then be reduced in relation to the loss of revenue from the tax.

The committee stressed that progress had to be made on other economic development policies, such as planning, education and incentives for research and development and exporting.

The MPs recommended that the Westminster and Stormont administrations work together to produce a clear, single package of incentives for businesses already working hard in Northern Ireland and attractive to potential foreign investors.


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