Belfast Telegraph

SNP argues for corporation tax move

The Scottish nationalists have said it would be reprehensible if Westminster gives Northern Ireland "transformative" new powers to cut corporation tax but denies them to Scotland.

Around 34,000 businesses are set to benefit from a reduction in the business levy after the Government tabled a bill devolving powers to the Stormont Assembly.

Ministers said the change could overhaul an economy which for years has been over-dependent on the state.

Legislation introduced in Westminster today is expected to be completed before May's general election and should allow Northern Ireland to set its own tax rate from April 2017, to compete with the lower one in the Republic of Ireland.

The Scottish National Party (SNP) deputy leader Stewart Hosie said: "It would be completely duplicitous and utterly reprehensible if Westminster was to deny to Scotland what it is keen to offer to Northern Ireland."

Danny Alexander, Chief Secretary to the Treasury, said the Government was committed to devolving powers across the UK where there is a strong argument for doing so, from giving Scotland control over income tax to today's corporation tax announcement for Northern Ireland.

He added: "Within the UK, the case for devolving corporation tax-setting powers to Northern Ireland is unique. It shares a border with Ireland, where a far lower rate exists, and the economy faces other special challenges.

"However, this agreement is conditional on the Northern Ireland Executive continuing to work to balance Northern Ireland's budget, to ensure that people across the UK can benefit from a stronger economy and fairer society under this Government."

The plan is a key part of the Stormont House Agreement aimed at breaking the political stalemate in Northern Ireland powersharing.

A decision on corporation tax was delayed until after the Scottish referendum last September.

Recently Scottish First Minister Nicola Sturgeon insisted that if Northern Ireland received the powers "then there is no argument that says it shouldn't also be devolved to Scotland".

Northern Ireland Secretary Theresa Villiers has championed the legislation and Chancellor George Osborne has also given his backing.

Mr Hosie added: "The fact that Ms Villiers is hopeful the UK Government can transfer the powers before the election shows how quickly it can be done when there is the political will.

"It also raises the question as to why, if Westminster can devolve corporation tax to Northern Ireland by May, they can't devolve air passenger duty and corporation tax to Scotland within the same timescale?"

The Stormont House Agreement, forged on December 23 after 11 weeks of discussions, has resolved destabilising wrangles over the administration's budget and its non-implementation of welfare reforms while establishing new structures to deal with the legacy of unsolved Troubles' killings.

It achieved less progress on other vexed disputes over the flying of flags and parading, but did set out new processes to examine how to find solutions to those matters in the future.

Much of the plan has been facilitated with a £2 billion financial package from the UK government - an offer that combines some new money from the Treasury with enhanced borrowing access and flexibility.

All parties in Northern Ireland have called for responsibility over the levy on business profits to be devolved in an effort to revitalise an economy emerging from decades of conflict.

A reduction in the rate from the UK-wide 21% to match the 12.5% for firms in the Republic of Ireland, a competitor for foreign direct investment, has been described as a "game changer" by advocates who consider it valuable in persuading firms to create jobs in Northern Ireland.

But it could lead to a substantial reduction in the block grant paid by Westminster to run public services.

Ms Villiers said, if the rate was lowered, around 34,000 businesses in Northern Ireland would stand to benefit, including 26,500 small and medium-sized enterprises.

She said: "In the light of an economy that for many years has been over-dependent on the public sector, allowing the Assembly to set its own rate for corporation tax offers the prospect of a transformative change in Northern Ireland."

She added: "Given the land border shared with a lower corporation tax jurisdiction, this measure has the potential to create thousands of new jobs and stimulate crucial growth in Northern Ireland's private sector, leading to a stronger, re-balanced economy."

Mr Osborne said he wanted to work with the Executive to ensure that Northern Ireland will attract investment and become more competitive, boosting the entire UK economy.

"This will give the Northern Ireland Executive greater power to rebalance the economy towards a stronger private sector, boosting employment and growth."

One concern of ministers was the potential for companies to move from Great Britain to Northern Ireland to take advantage of a favourable new tax system.

In Northern Ireland former Stormont finance minister Sammy Wilson has sounded a note of caution about the cost of the change to the block grant for public services.

The Ulster Unionists have already expressed serious reservations about the state of Northern Ireland's finances despite the Stormont House Agreement.

The NIO said: "The regime has been carefully designed to enable the Northern Ireland Executive and Assembly to encourage genuine investment that will create jobs and growth, while minimising opportunities for avoidance and profit-shifting."

Northern Ireland already offers lucrative incentives to foreign firms to set up there via a government job creation agency which has helped create thousands of extra posts.

US fantasy drama Game Of Thrones has been filmed there and major US investors like Allstate insurers and engineering firm Caterpillar have established major bases.

In response to the SNP challenge an NIO spokesman added: "Northern Ireland faces a set of unique economic circumstances, including the cross-border challenge from the Republic, an over-reliance on public sector employment and the difficult legacy of the Troubles."


From Belfast Telegraph