THE BRITISH treasury is showing more support for plans to cut Northern Ireland’s corporation tax rates than it has done before, Northern Ireland First Minister Peter Robinson said yesterday after talks in London.
“We had our most useful talks with the treasury on the issue. It’s significantly advanced,” said Mr Robinson, who was accompanied by Deputy First Minister Martin McGuinness.
The “enthusiasm” of Northern Ireland Secretary of State Owen Paterson for a corporation tax rate cut seems to be “rubbing off” on the treasury, said Mr Robinson, “because in the past we have seen treasury officials openly at odds with the NIO”.
A consultation document has been circulated by the treasury to Northern Ireland’s political leaders, though it is far from clear if an agreement can be reached before the Northern Ireland Assembly elections are held in May.
Although the treasury opposes giving the Scottish and Welsh devolved institutions powers to cut corporation tax, it said Northern Ireland had its “own unique set of circumstances, not least a land border with the Republic of Ireland with one of the world’s lowest corporation tax regimes”.
However, the consultation document cautioned that cutting corporation tax in the North might not have the same effect as the 12.5 per cent rate has had in the Republic in attracting foreign investors.
Under the plan, if implemented, the Assembly would be given power to cut tax rates, but the block grant given by Westminster for the North’s public services would be cut by an equivalent amount.
Mr McGuinness said the consultation document is still “a work in progress”, adding that it is a “hugely important issue that we have to get right” if Northern Ireland is to reduce its dependency on public sector spending.
“We do believe that we are particularly disadvantaged in the North by dint of the fact that we are competing against an economy that has been able to attract very substantial foreign direct investment over many, many years,” he said.
Saying that the North is moving “emphatically” towards having tax-cutting powers, Mr Paterson said “some of the language and the context” of the consultation document will be changed in discussions to take place over coming weeks.
But he said too much of the debate in the North centred on the tax that would be lost by cutting corporation rates, rather than on the increased revenues that could be generated by a more vibrant local economy.
Earlier, Mr Robinson and Mr McGuinness held robust talks with British deputy prime minister Nick Clegg about the effects of the spending cuts on Northern Ireland, which has suffered major cuts to future capital spending.
Saying that recent economic figures showed the North “is still in recession”, Mr Robinson said the loss of £300 million “that some might say was stolen from us” showed “our instinct at that time over the period that has passed has proven to be right”.
