Corporation tax powers for north – at long last

BRITISH prime minister David Cameron is expected to give Northern Ireland the go ahead today to set its own rate of corporation tax.

But he will only rubber stamp the move should the Tories win the next general election – which is not expected to be called before 2015.

It is believed Mr Cameron will make the long-awaited announcement after meeting with the first and deputy first ministers, who are due in No 10 for crunch talks on the issue.

And is understood that Mr Cameron – who has been considering a report on the matter since November – is finally prepared to allow Stormont powers to vary corporation tax.

There have calls for many years for the north’s tax rate for businesses to be reduced to compete with the lower 12.5 per cent charged in the Republic.

Companies in the north are charged 23 per cent on any profits made – although in last week’s budget chancellor George Osborne announced it would be lowered across the UK to 21 per cent next year and 20 per cent from April 2015.

Businesses and politicians have been lobbying for the north to be treated as a special case for several years, although any deal will also result in a reduction of the block grant afforded to Northern Ireland from Westminster.

There had been fears the British government could ignore the calls, worried it could lead to calls from other UK regions for similar concessions.

In recent years the issue raised its head in 2007 with the Varney review.

It was established by the then chancellor Gordon Brown to carry out a review of tax policy and, in particular, the bid to harmonise the region’s corporation tax rate with the Republic.

Although Northern Ireland businesses would pay a lower level of tax, the amount of funding for the north is expected to be reduced by around the same amount.

The exact figure is not known although it is anticipated to be around £300 million.

Yesterday the Confederation of British Industry (CBI) in the north published an open letter to Mr Cameron urging him to grant corporation taxvarying powers to the Northern Ireland executive.

Its chairman Ian Coulter said the powers would be “the economic lever most likely to rebalance the Northern Ireland economy”.

“Northern Ireland boasts many innovative businesses that are growing and flourishing, despite the challenges, and a skilled and dedicated workforce,” he said.

“But many more businesses and individuals are in dire straits and a generation of talented young people is being lost.”

The Northern Ireland Independent Retail Trade Association (NIIRTA), meanwhile, said that devolving corporation tax “is the united view of not just every business organisation but also the five main local political parties”.

NIIRTA chief executive Glyn Roberts said: “Our economy is lagging behind the rest of the UK in recovery and we face a growing unemployment problem.

“Corporation tax, while not being the silver bullet, is the potential game-changer we need to attract more FDI, which will boost jobs and spending in the local economy.”