Posted on Monday 24 September 2012 by Ulster Business
Eamonn Donaghy, right, is pictured at the Grow NI launch with former Northern Ireland Secretary Owen Paterson
Eamonn Donaghy, speaking on behalf of Grow NI, the umbrella body formed to campaign for a reduction in corporation tax in Northern Ireland, said the economy was in such bad shape that action is needed urgently.
“We are now beyond the stage of report gathering and consultations,” the KPMG tax expert said in a statement.
“Northern Ireland as a region is feeling the full impact of the global recession and frankly there is little hope of an economic recovery unless there is a dramatic policy intervention. A cut in Corporation Tax is the move which has the greatest potential to help us rebalance our economy in a sustainable and tangible way.”
The campaign to get Westminster to grant Northern Ireland the powers to set its own rate of corporation tax has been running for almost two years. Supporters say that cutting the headline rate from the UK rate of 24% to 12.5%, in line with the Republic of Ireland, is the fastest way to stimulate the private sector and create jobs.
While all of the local political parties have expressed support for the move, the potential cost has proved a sticking point. Under EU law Northern Ireland would have to make up for the lost tax revenue from the block grant received from London – a cost which was initially estimated at £200m-£300m a year, but which is understood to have been pushed well north of £500m by the Treasury.
The next meeting of the Joint Ministerial Council, at which negotiations on the potential cost have taken place, will be held of October 18. It will be the first to be attended by the new Secretary of State Theresa Villiers, who took over from Owen Paterson earlier this month. A vociferous cheerleader for the devolution of corporation tax, Mr Paterson’s move in the recent cabinet reshuffle was read by some as a sign corporation tax is now a lost cause for Northern Ireland.
However, Mr Donaghy said that the economic news over the last few weeks has increased the importance of making a dramatic policy intervention in order to encourage investment and achieve a transformation in our economy.
“There is no ambiguity at all on this issue, the five main parties are behind the campaign to reduce Corporation Tax locally, as are the main business organisations,” he said.
“The issue is now political and whether or not we get a devolution of the powers is down to the Chancellor and the Prime Minister. Our own politicians have made their views known and played a full part in the Ministerial working group, but those efforts must now be stepped up."
GROW NI is urging its members to engage with politicians in Northern Ireland as well in the UK.