The Secretary of State for Northern Ireland is urging the Northern Ireland Executive to follow the Republic and introduce a lower rate of corporation tax for Northern Ireland.
Speaking at a seminar in Belfast ahead of his visit to the USA for St Patrick's week, attended by the Minister for Enterprise Arlene Foster, the SDLP deputy leader Alasdair McDonnell, members of an NI Assembly who will be called on to implement such a move, he signalled the UK Government's strong support for a cut. Ken O’Brien, Editor of Finance Dublin, attended the seminar, organised by TheCityUK and Invest Northern Ireland and hosted by Citi.
The Secretary of State, Owen Paterson MP, said ' the Republic, quite rightly were fighting like tigers to preserve their rate of corporation tax' in the face of EU opposition, and I admire them for that'. He said that he advised George Osborne that 'we should support them to the fullest' on the issue.
He said that the Government was in the final stages of producing a paper on the Corporation tax proposal, a topic that has been opened up again by the new Tory/Lib Dem Government after having been kicked to touch for years by the Brown administration.
The issue is in the balance, as the decision has to be taken by the NI Executive, rather than the UK as a measure available to them under the tax varying powers introduced under devolution in the UK. 'I'm sticking my neck out', he said. He said that NI could obtain the lowest tax rate in Europe- if the Executive are brave. 'I'm fed up with the pessimism on this, people should stop dithering on it'.
'It's in the balance' he said, as to whether it would be given the go-ahead by NI's devolved administration. But, he said, 'look at what the Republic have done - since they introduced the 12.5 rate of corporation tax’.
'They have grown the cake'. 'It is an example of what can be done here - we would be saying this is the place to do business. And, where would your business be if we could get our rate down to the level of the Republic'.
"From venture capital to bank lending; from opening up government procurement that helps firms to expand, to cutting back the bureaucracy that can get in the way of their growth - we intend to do all of those things. I also want to devolve the power to set the rate of Corporation Tax to Arlene Foster and her colleagues. I remain convinced that this measure could be transformational for Northern Ireland in helping to rebalance the economy and help move it away from one dependent on the public sector to the place where the world will want to come and do business'.
"Being a pro-growth Government means we have to make sure that all of the Whitehall machine - not just the Treasury and the Business Department - but the whole of the government machine is geared up to boost enterprise. Of course we also need to make sure that our efforts in Whitehall dovetails with those in Stormont and that is why I and my officials work closely with Arlene and her team in DETI and Invest NI. Because we are all on the same team - we are batting for Northern Ireland and for its people so next week when I shall be in the USA for St Patrick's week, I shall be telling folk in Washington, New York and Chicago about everything Northern Ireland has to offer" he said.
The issue has continued to provoke debate, as the Executive will be responsible for making good any revenue losses under the NI Corporation tax revenue head if any moves they make result in a shortfall in corporation tax revenues.