CORPORATION TAX:BANKS SHOULD not benefit from any cuts in corporation tax that may be introduced as part of new taxation powers for the North, said Deputy First Minister Martin McGuinness.
Northern Secretary Owen Paterson yesterday launched a three-month consultation period on transferring tax powers from London to the Stormont Executive.
The case for cutting corporation tax to compete with the Republic in attracting overseas investment will be considered as part of the consultation process.
But Mr McGuinness said: “I would hope the banks wouldn’t benefit from this.
“I think it’s a duty and a responsibility on us, as we negotiate this through, to ensure that the full benefit of this goes towards the people that we represent and not towards those who in my opinion have effectively betrayed the people in the course of the recent past.”
If approved, legislation to enable the Assembly to vary tax levels in an effort to increase competitiveness could be in place next year. Political and business support for the debate on measures to boost the private sector, increase employment and cut tax has been widespread.
Flanked by senior figures from the five main Assembly parties, including four party leaders as well as the First Minister and Deputy First Minister, Mr Paterson published a consultation paper which calls for the “rebalancing” of the Northern Ireland economy.
Citing the scale of the public sector and the North’s dependence on the British treasury’s annual subvention, he said the current situation could not continue – especially while the UK faced a huge debt burden.
The treasury consultation paper cites Northern Ireland’s “unique” economic position alongside the Republic’s more competitive tax regime and the fact that the economy is still emerging from nearly 40 years of conflict.
Treasury minister David Gauke, present in Northern Ireland following Wednesday’s British budget, reflected London’s traditional conservatism on matters relating to overall UK taxation policy when he admitted: “It may well be the case that a lower rate of corporation tax in Northern Ireland can play a significant part in helping to strengthen the economy.”
“This consultation is a real opportunity for the people of Northern Ireland to talk this issue through, to balance these costs and risks with the potential transformative effects of lower corporation tax rates,” he said.
“It is a chance for Northern Ireland to set its own principles and priorities and to play a more direct role in determining the competitiveness of its economy.”
With strong political and business support for the transfer of some taxation powers to Stormont in evidence yesterday, the consultation is aimed at advancing the debate on the appropriate level of corporation tax for Northern Ireland relative to the 12.5 per cent currently levied in the Republic as well as other measures.
Under EU rules any cut in tax would have to be matched by a corresponding cut in the annual block grant currently worth about £9 billion (€10.2 billion). Mr Paterson believes cutting tax is an important element of measures to boost the wealth-creating sector of the economy and increasing the overall size of the North’s tax-take through economic growth.
Addressing the consultation launch, Peter Robinson admitted: “Despite some economic successes in recent years we have not transformed the economy the way we would have liked. We therefore need to look elsewhere and that is what we are doing now.
“We want a debate on all of these issues, costs, benefits and impacts and we would encourage all interested stakeholders to respond to the issues and questions raised.”
Deputy First Minister Martin McGuinness said: “Lowering corporation tax is not the only vehicle open to us and this paper presents a range of other tax measures. It is crucial we strengthen the private sector, attract new investment and increase economic growth while maintaining investment in the public sector.”
Minister for Finance Sammy Wilson said in a statement that treasury estimates of the likely impact of a corporation tax cut could be well below the mark.