A PROPOSAL to cut Northern Ireland’s corporate tax rates to match the levels charged in the Republic is “not a gamble”, Northern Ireland secretary of state Owen Paterson said.
Facing questions yesterday at the House of Commons Northern Ireland Affairs Committee from North Down MP Lady Sylvia Hermon, Mr Paterson said: “It is emphatically not a gamble. The gamble is in doing nothing.”
A consultation paper on the case for giving the Northern Ireland Executive the power to impose lower rates than elsewhere in the UK, which is strongly supported by Mr Paterson, was published last week.
Replying to a Conservative MP on the Committee, Mr Paterson said: “Your constituents are contributing to a massively higher rate of public spending in Northern Ireland – 25 per cent more than your guys get and mine get. The point I am making is Northern Ireland doesn’t want to be dependent like this.”
Pointing to the usefulness of low corporate rates, Mr Paterson said the Republic, “despite all of its problems” with the banking crisis and the need for multi-billion loans from the European Union and the IMF, had still managed to attract 35 per cent of all of the foreign direct investment coming into Ireland and Britain.
Labour MP Joe Benton said that many other poor parts of the UK could make an equally justified case for lower business taxes and said “a flood of applications” could now be expected.
“I would hate to be in the shoes of the responsible minister who has to deny these things,” he said.
Mr Paterson said he was confident that the proposal would pass EU scrutiny because it would comply with the Azores judgment which demands that powers are completely transferred to a local administration enjoying “complete independence of decision-making” afterwards. “We do not see any major problems,” he told the committee.
Each 2.5 per cent cut in corporate tax would reduce the block grant the North gets from the treasury by £60 – £90 million in tax revenue, but Mr Paterson said he was confident the gap would be made up by new revenues from firms attracted to the North and by the growth of those already there.
