Corporation tax cut paper launched for Northern Ireland
- 24 March 2011
- From the section Northern Ireland
A consultation paper which examines the case for lowering corporation tax rates in NI has been published.
Low rates of corporation tax are considered an important means of attracting overseas investment.
The document examines possible ways to devolve the power to set the rate to the Northern Ireland Executive.
The overall UK rate is 28% and will fall by 5% over the next four years, but will still be much higher than the 12.5% rate in the Irish Republic.
The paper states that any fall in corporation tax, if agreed by the Treasury, would have to be paid for by a corresponding fall in the block grant which could be up to £300m a year.
Both the first and deputy first ministers have said they want Northern Ireland to be able to set its own corporation tax rates in the future.
The paper cites Northern Ireland's "unique circumstances" which could justify the move including its large public sector, the economic legacy of the Troubles and the land border with Ireland.
'Potential policy lever'
In addition to discussing the benefits and costs of devolving corporation tax-varying powers to the Northern Ireland Executive, the document considers issues arising from the implementation of such a policy as well as other possible tax options.
In welcoming the publication, First Minister Peter Robinson said: "Despite some economic successes in recent years we have not transformed the economy the way we would have liked.
"We therefore need to look elsewhere and that is what we are doing now.
"We want debate on all of these issues, costs, benefits and impacts and we would encourage all interested stakeholders to respond to the issues and questions raised," he said.
Deputy First Minister Martin McGuinness said the paper presented a lower corporation tax rate as a "potential policy lever".
"Lowering corporation tax is however not the only vehicle open to us and this paper presents a range of other tax measures," he said.
"It is crucial that we strengthen the private sector, attract new investment and increase economic growth while maintaining investment in the public sector."
The consultation period will last until June 2011. The government, in consultation with the Northern Ireland Executive, will then make decisions bearing in mind the responses received.
Copies of the paper are available via the Treasury website.