Northern Ireland

Corporation tax: NI leaders argue case at Westminster

Cash
Image caption The politicans hope to lure huge amounts of inward investment into Northern Ireland

Once more, but perhaps for the last time, Stormont's leaders will travel to Westminster on Thursday to argue their case for devolving power over corporation tax.

They want to lower the rate in Northern Ireland to match, or better, the Republic of Ireland.

By doing so, the politicians hope to lure huge amounts of inward investment and encourage local enterprise.

But there is a problem. The cost.

European rules stipulate that regions can vary taxes like corporation tax, but they must compensate central government for any revenue lost.

And the Treasury - who set the rules in Northern Ireland - have come up with a formula that would squeeze Stormont's budget to an eye-watering extent.

The Treasury officials talk of the "explosively repercussive" effects of implementing the cut.

It is estimated that after a few years the cost to Stormont's budget would be £700m annually.

The initial costs would not be that much, but still above the £400m mark and still, as things stand, too costly.

When the idea was first conceived, the proponents in Northern Ireland believed they could satisfy the European rules by estimating an average figure based on historical tax takes.

It seems Treasury officials have been a little bit more diligent.

They are not content with back-of-the-envelope estimates and have built in a series of assumptions that put the policy far beyond the economic reach of the devolved government.

Image caption Chancellor George Osborne appears to have a benevolent attitude towards devolving corporation tax

But was it economic diligence or political connivance that drove the Treasury towards this model?

Historically, the Treasury has never been in favour of devolving big national taxes like this, so that may have increased resistance.

The only reason the policy was ever entertained was because of strong support from former NIO incumbent Owen Paterson and, it appears, a benevolent attitude from the Chancellor George Osborne.

But the government is a coalition. And what George Osborne wants, he does not always get.

Especially when there are bigger political battles to be fought.

Some involved in the talks believe there is a remote possibility that David Cameron could yet intervene on Stormont's behalf - his contribution to the peace process perhaps?

But when Peter Robinson, Martin McGuinness, Sammy Wilson and Arlene Foster sit down to negotiate in Westminster, they will be facing Treasury Minister David Gauke and his officials with new Secretary of State Theresa Villiers hovering somewhere in between.

The politician with most effect over these talks is a man who will not be in the room, Scotland's First Minister Alex Salmond.

With the ink on terms for Scotland's historic vote on independence hardly dry, a major concession to another devolved region on an issue like business tax would become a very lively issue in that independence debate.

So, the suspicion remains, perhaps unfounded, that Treasury diligence in designing an expensive formula may simply be convenient cover for a political desire to see this demand go away.

And how better to make it disappear than to make it unwanted?

This week, we have learned that an American coffee chain has paid no corporation tax in the UK for three years.

So Stormont politicians might find it more productive to spend less time at the Treasury and more time in Seattle with Starbucks executives, seeking the secrets of that zero rate.