View of armchair economist simply doesn't add up
The public sector-slashing chairman of the Conservatives in Northern Ireland, Irwin Armstrong, obviously has little grasp of economics in his letter condemning me for indicating that a reduction in corporation tax would not happen immediately (Write Back, September 22).
First, it has always been accepted that the introduction of a reduction in the rate of corporation tax would not happen immediately upon devolution. Even those who argue strongly for its devolution have indicated one of the ways of reducing the impact on public spending would be to have it deferred for a number of years.
All of those who have been involved in discussions indicate that what companies need is some certainty about the rate of taxation and, if companies know ahead of time that corporation tax is likely to be reduced, that will influence their investment decisions.
These decisions do have long lead-in periods and, even if a firm decides to invest in Northern Ireland today, it is unlikely to be up and running and earning profits for at least two or three years. It is once profits are earned that the rate of corporation tax is important. Equally, Mr Armstrong obviously has no understanding of public finances. Even the Treasury and the Secretary of State have accepted that the devolution of corporation tax will cost Northern Ireland and there will be a reduction in the amount of money for public spending.
To say, as he does, the that there will be no impact on Northern Ireland from the devolution of corporation tax beggars belief.
It is fine for Mr Armstrong to carp from the sidelines. As far as I am concerned, my only interest is in ensuring we work our way through the current economic recession as effectively as we can. That is the difference between someone who has real decisions to make and armchair economists who pontificate without having to take responsibility for the policies which they recommend. SAMMY WILSON MP MLA
Minister of Finance