A potential cut in the business tax rate in Northern Ireland is not a threat to the economy in the South, Tánaiste Eamon Gilmore has insisted.
Stormont ministers are lobbying Britain's department of the treasury for the powers to set their own corporation tax in a bid to kick start the region’s flagging private sector by making it more competitive with the southern rate.
On his first official visit to meet Executive counterparts in Belfast, Mr Gilmore said a tax cut in the North should be viewed as an opportunity for the whole island.
“We don’t see that as a threat at all,” he said. “I think the challenge for both of us is to work together to grow the economy North and South, that certainly is something that is very much on the minds of the Irish Government and it’s something that we intend to work co-operatively on with the First Minister, Deputy First Minister and with the Executive here.”
The business levy in the North currently sits at 26 per cent, compared to 12.5 per cent in the South.
Mr Gilmore held separate meetings with First Minister Peter Robinson, Deputy First Minister Martin McGuinness and Justice Minister David Ford at Stormont Castle before visiting a number of cross-community projects.
“I think what we have to do in terms of the economy of the island is look at the opportunities there are for growth, look also at areas where we can more sensibly and perhaps more cost effectively deliver services both sides of the border,” he said after meeting Mr McGuinness.
He pointed to co-operation in the health sector and noted the planned cancer unit in Derry which has been part funded by Dublin and will treat patients from both jurisdictions.
A treasury paper on stimulating the North's economy presented a cut in corporation tax as a potential option. Any reduction would be countered by a proportionate cut in direct funding from London through the block grant.
While the issue is out for public consultation it is unclear whether the British government will approve the move, mindful that other regions may accuse it of treating Northern Ireland favourably.
There is also a debate within the Assembly as to what rate should be set, with some parties suggesting a level even lower than that in the Republic.
Union bosses are opposing the cut, claiming it will take much-needed public funding and put it in the pockets of big businesses.
Mr McGuinness said Sinn Féin favoured an equal rate on both sides of the Border. “We’ve always said in the course of this debate what we want to see is an equalisation of the positions,” he said after the meeting in Stormont Castle.
“I think that’s the sensible way to proceed, but all of this is going to be subject to negotiation.
“First of all we have to get the powers given to us by the treasury and London and that’s been a bit of a battle because there are mixed signals coming from the treasury and from the political end of things.”
He said he and Mr Robinson would be pressing the case once again at the Joint Ministerial Council meeting with British prime minister David Cameron and Scottish and Welsh leaders in London next week.
PA