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Further stalling on tax cut will send more firms south

The devolution and subsequent lowering of corporation tax has the potential to bring significant benefits for the Northern Ireland economy. The Treasury has previously outlined the advantages.

Firstly, the confidence provided to businesses to invest and expand within a competitive and stable tax system.

Secondly, the positive effect on local private sector investment and Foreign Direct Investment (FDI).

Thirdly, the facilitation of a movement away from our over-reliance on the public sector.

It was for these reasons that the Ulster Unionist Party played a major part in ensuring this issue is on the agenda.

Since the establishment of the Joint Ministerial Working Group on Rebalancing the NI Economy last September, the First and deputy First Minister, alongside other DUP ministers, have met on a number of occasions with representatives from the Treasury and the Northern Ireland Office to examine the case for the transfer of this important tax-varying power from London to Belfast.

However, despite the existence of this working group, it appears that little progress has been made with the Treasury claiming that significant differences still remain, worsened by the fact that the group is not due to reconvene until September.

As yet no timescale has been publicly outlined for any devolution to take place and we have had no agreement on the size of reduction to the Northern Ireland block grant with estimates from the Treasury and Assembly differing by a substantial margin.

In the spring time, negotiations by the Working Group seemed to be progressing well, but by the summer reports became very negative, with no new progress being made.

Recently, I was pleased to note that the enterprise minister remained supportive of the notion of devolving corporation tax, yet it seems the finance minister doesn't have the confidence in the Working Group's ability to deliver on it.

Where exactly does the DUP stand on this issue?

Are they really committed to achieving the devolution and subsequent lowering of corporation tax?

Surely, the aim will not succeed if the Working Group is not fully committed. I believe that we need clarity and the Working Group should release the calculations on the expected value lost from the block grant.

These are questions that businesses in Northern Ireland and also potential investors, need answered.

The uncertainty surrounding the situation is undoubtedly a major drawback for companies who are looking at potential investment opportunities here at the current time.

I learned recently of a successful Northern Ireland business, which grew rapidly from a small acorn, subsequently opening an office in the Republic of Ireland in order to avail of their tax regime.

This is an understandable situation for that business but one which we need to address given that the rate of corporation tax in Ireland remains at a much lower 12.5% which translates into a significant disadvantage as we compete with our neighbours in the Republic.

It reflects poorly on the ability of those on the Joint Ministerial Working Group to negotiate at the highest level to deliver for the people of Northern Ireland during these tough economic times.

The current state of affairs was starkly illustrated in the recent labour force statistics which showed increasing unemployment.

What is clear is that businesses in the private sector are in need of a shot of life which is more substantial than a relatively small relief in rates or cutting red tape.

A lower rate of corporation tax is not an economic panacea but it could be a principal instrument in creating the environment in which business can grow and jobs are created.

Effective leadership is required to deliver on this.