REACTION:BUSINESS LEADERS in the North have universally welcomed the publication by the UK government of a new consultation paper on "rebalancing the Northern Ireland economy".
The North’s Chamber of Commerce believes the significance of the paper cannot be “underestimated”. Francis Martin, the chamber’s president, said it could be a “milestone” in marking a much-needed sea change towards long-term growth in the North.
“Our view is that a region-specific reduction in corporation tax can be a major step in rebalancing the Northern Ireland economy – the UK-wide 2 per cent reduction in corporation tax announced in Wednesday’s budget does not address the unique situation in Northern Ireland.
“The fact that we have a land border with the Republic with their lower tax rate puts Northern Ireland at a significant disadvantage when it comes to securing direct investment. This is our moment for overcoming this drawback.”
Other key business bodies in the North have echoed his sentiments.Joanne Stuart, chairwoman of the Institute of Directors in Northern Ireland, said the business community strongly believed that a more competitive tax regime in the North would provide a vital impetus in this direction.
The chairman of the Confederation of British Industry in the North, Terence Brannigan, said the North has no alternative but to create a more balanced, competitive and sustainable economy.
“We need to encourage investment: a more competitive taxation environment will clearly help, and potentially could make a radical difference,” said Mr Brannigan.
The Northern Ireland office of property consultants CB Richard Ellis believes that a reduction in corporation tax could play a vital role in attracting new private investment to the region.
It said a number of important investment announcements by corporate heavyweights, such as law firm Allen & Overy, had been made in recent months. The property consultants believe if the North secured a lower rate of corporation tax than elsewhere in the UK it would deliver “momentum” to Invest Northern Ireland’s campaign to woo new investors .
Its research shows prime headline quoting rents in the North are approximately €14.70 (£12.50) per square foot compared to approximately €32.50 (£27.60) for equivalent accommodation in Dublin’s central business district.
Retail groups also welcomed the opportunity to explore how a reduced rate of corporation tax could benefit the overall economy.
Glyn Roberts, chief executive of the Northern Ireland Independent Retail Trade Association, said any initiative that resulted in workers accessing higher salaries would directly increase spending in the retail and hospitality sectors.
But the Royal Institution of Chartered Surveyors sounded a note of caution regarding the consequences of the Northern Ireland Executive securing new tax setting powers.
Ben Collins, the institution’s Northern Ireland director, said corporation tax was only one method worth considering to rebalance the local economy.
Mr Collins said any impact from a devolvement of tax powers, such as reduction in the block grant that the North receives from the UK, would need to be investigated.
“To be truly successful, any reduction in corporation tax would have to go hand-in-hand with a commitment to investing in infrastructure.
“Additional means of raising revenue would therefore become even more important, including introducing domestic water charging.”
