Northern Ireland

Corporation tax cut 'not done deal'

Corporation tax Image copyright PA
Image caption Northern Ireland's rate of corporation tax is set to be cut in 2018

Northern Ireland's Finance Minister has said the executive has not yet agreed that cutting corporation tax is affordable.

Sinn Féin's Máirtín Ó Muilleoir was answering questions from members of the assembly's finance committee.

Under the Fresh Start deal, the executive made a commitment to cut the tax rate to 12.5% in 2018, on the basis that the measure is affordable.

A cut in corporation tax will mean less revenue is collected for the Treasury.

European rules mean the executive will have to make up the shortfall through a cut in its block grant.

That is likely to mean a cost of about £200m a year when the measure reaches a steady state.

Economic growth

Mr Ó Muilleoir said he was "rebooting" negotiations with the treasury on the issue of "secondary benefits".

That refers to the additional consumption tax revenues, such as VAT, which would be collected if the corporation tax cut leads to significant economic growth.

There is currently no mechanism for any of those additional revenues to be assigned to Stormont.

Mr Ó Muilleoir said it was "unacceptable" that the Treasury would get all the secondary benefits.

TUV leader Jim Allister put it to Mr Ó Muilleoir on Wednesday that the public perception is that corporation tax is "a done deal".

Mr Ó Muilleoir said that had not been his perception.

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