Posted on Wednesday 21 March 2012 by Ulster Business
Secretary of State for Northern Ireland Owen Paterson echoed the Chancellor’s description of the Budget as one which “rewarded hard work” and promoted “jobs and business growth”.
Among the key measures introduced of particular relevance to Northern Ireland were:
But while commentators praised some of the measures introduced today, there was a general consensus that more could and should be done to revitalise the local economy and help create conditions for growth.
Below are some of the initial views of local economists and business organisations.
“The budget brought few surprises, they seldom do in an era of leaks and spin, but there were announcements which will have direct relevance for Northern Ireland. The changes to income tax thresholds will be welcome as the region has a lower average wage and relatively fewer high earners. This benefit, that will not take effect until 2013, must be set against the welfare changes already announced and the possibility of regional pay in public service, both having an impact on the NI economy.
“Overall the budget gives little reason to alter the Economic Eye forecasts for NI which at 0.4% for NI in 2012 and 1.6% in 2013 remains below the UK average and insufficient to generate the levels of jobs so badly needed in the region.
“The announcement of an accelerated reduction in UK Corporate Tax rates with an explicit intention to aim for 20%,confirmation of the devolution of Air Passenger Duty policy to Northern Ireland, allied to increased local spending powers in places like Manchester indicate a willingness to devolve responsibility for hauling the UK economy back towards growth. This is a welcome attitude for Northern Ireland and its on-going debate to seek the ability to lower its own Corporate Tax rate. If policies have a well evidenced ‘business case’ and the long term effect is a net benefit for HM Treasury there seems to be a willingness to listen, such is the perilous state of UK finances.”
“Businesses will welcome the Chancellor’s decision to improve the competitiveness of the UK’s tax system for companies and entrepreneurs, within a fiscally neutral budget.
“The further 1% reduction in Corporation tax is welcome – with a need to transform the Northern Ireland economy by reducing Corporate tax to 12.5% this will reduce the cost of achieving this goal with a decision required by the summer. Smaller firms will also welcome the proposals to simplify the tax system, but businesses will be disappointed that he did not do more to cut red tape and reduce the barriers to hiring staff and creating new jobs.
“Tax credits announced for the creative industries sector and an above-the-line R&D tax credit are both welcome. The Chancellor has also confirmed that Belfast will be one of the ‘super-connected’ cities. However we are disappointed that no Enterprise Zone has been announced for Northern Ireland.
“With lower average incomes the increase in personal allowances will be particularly welcome in Northern Ireland and provide families with some additional spending resources, and provide a boost to confidence.”
“We are pleased to see corporation tax being cut further and faster, but this in no way replaces the need for Northern Ireland to get powers to set its own, much lower rate. Even when the UK rate gets down to the Chancellor’s target of 22%, it will still be almost twice the rate applied in the Republic of Ireland, but his move means that the cost to the NI Executive of cutting it further would be lower than initially projected.
“The new tax relief for video games, animation and television production sectors will also be helpful to Northern Ireland’s burgeoning creative sector, as will be the commitment to simplify taxes for our micro businesses and raising the VAT threshold to £77,000 and the commitment to reduce some health and safety regulation.
“However, the intention to press ahead with the “real time” collection of PAYE and NICs on wages in October 2013 could add to the administrative burden of small businesses.
“The increase in personal allowances will leave some more money in consumers’ pockets, which will help to increase confidence, but we are disappointed that the Chancellor has not announced a cut in the level of fuel duty and that the rise in August is still to go ahead. This will continue to put real pressure on small businesses and their customers.”
“Whilst we welcome the reduction in corporation tax, it is not enough for Northern Ireland. We urge the Treasury to speed up their response on the call from the Northern Ireland Executive and the local business community for a reduction in Corporation Tax to the rate currently operational in the Republic of Ireland. Reducing this tax will increase FDI and stimulate greater investment by SMEs in particular in areas such as innovation and export development.
“Business here will have limited benefit from the national loan guarantee scheme, announced on Tuesday as not all our banks have access and those that do are still risk adverse. Access to finance needs further consideration. We note the additional support for start up companies in Enterprise Zones in Scotland and the plans for Wales. The Chamber has long urged a similar approach in Northern Ireland and will continue to press Government for such an initiative for start-up companies here.
“Bureaucratic obstacles inhibiting small and medium sized businesses are still not being effectively addressed comprehensively by the Government for the benefit of all companies especially those in manufacturing or those with a turnover of more than £77k.
“We are not convinced that private-sector job creation is being given the priority status it should have within overall economic strategy. The freeze on fuel duty for hauliers offers limited help to an industry which is vitally important to the local economy but our diesel costs are still significantly higher than in other parts of GB and many parts of Europe.”
“We welcome the Chancellor’s commitment to back business which is reflective of the Northern Ireland Executive’s focus on the economy. However, many of the proposals were light in detail and we await various Government announcements in the coming weeks.
“An extension of existing film tax credits and to the digital content industry is good news for Northern Ireland where there is a growing and successful sector. IoD members are mentoring small firms in this sector helping realise the benefit of our strong talent pool.
“Simplification of the taxation bureaucracy for small firms is welcome along with the news that national insurance contributions and income tax are to be amalgamated. Red tape remains a bug bear for business leaders in Northern Ireland.
“The Chancellor’s announcement to consider the regional differences in public sector pay will be warmly received by many business leaders. The private sector for too long has had to compete with higher salaries and better conditions offered with many public sector jobs. An effort to level the playing field would assist a re-balancing of the economy.
“The proposed cut in corporation tax to 24% in is largely irrelevant for Northern Ireland companies that compete directly with the Republic of Ireland on a rate of almost half.”
“The positive signals from the Chancellor’s Budget Speech today on Income Tax and Corporation Tax are good news for Ulster business.
“A key message from the Chancellor was that high tax rates are counter-productive. They discourage business activity, while not raising much additional tax.
“Lower paid workers in Northern Ireland will also benefit directly from the effect of raising of the personal allowance threshold. The downward trend in Corporation Tax rates across the United Kingdom and Mr Osborne’s clear indication of the importance of being able to compete in this area vindicates the ongoing campaign for a reduced rate of Corporation Tax for Northern Ireland.”
“We are disappointed that the Chancellors Budget Statement contained little to indicate a coherent growth strategy to assist our small businesses nor measures to stimulate consumer confidence to build up our retail sector.
“The Chancellor would have been better giving small businesses and independent retailers a National Insurance holiday to employ young unemployed people and cut VAT to encourage increased consumer spend.
“Both of these measures would have gone some way in addressing our growing levels of unemployment in Northern Ireland”
“Again we were disappointed that no new decrease in the rate of full duty was announced”
“However we do welcome measures such as funding Wi-Fi in Belfast, tackling Red Tape, simplifying the small business tax system and a small reduction in the overall rate of Corporation Tax.
“The Chancellor also mentioned the establishment of an Enterprise Zone in Northern Ireland and would call upon the Secretary of State to give more details on this welcome idea.”