Northern Ireland business organisations believe that a reduction in corporation tax to the 12.5 per cent available in the Republic is only one option available to British chancellor Gordon Brown to boost investment in the region. Most would be satisfied by a range of other incentives, from a reduction in business rates to financial grants for research and development.
Stephen Kingon, chair of the Northern Ireland Centre for Competitiveness and a member of Business Alliance, Northern Ireland's largest business group, said he was not surprised that a cut in corporation tax was not included in the €79 billion economic package announced by the chancellor on Wednesday.
The Business Alliance has previously said that any justification for a cut in corporation tax was more likely to be political rather than economic. The Business Alliance represents the Northern Ireland Institute of Directors, the Confederation of British Industry of Northern Ireland and the Northern Ireland Chambers of Commerce among others.
Mr Kingon said yesterday that it was almost certain that other measures including financial incentives to encourage businesses to invest in research and development would be considered by the chancellor.
"The Irish economy has increasingly looked to providing incentives for research and development as part of an economic growth strategy, and there is no reason why we shouldn't follow that strategy," he said.
Frank Bryan, chair of the Institute of Directors Northern Ireland, said that the main issue was that any economic package would achieve the necessary outcomes. "One of those is the need for private sector growth of 5 per cent per annum over at least a decade so that we can create a more balanced and sustainable economy. Corporation tax rates could play a part in that along with a range of other fiscal incentives."
Mr Bryan refused to be drawn on what other incentives he would like to see. "The onus is on the Treasury to come up with that," he said.
Glyn Roberts of the Federation for Small Businesses in Northern Ireland said his organisation had already presented both political parties in Northern Ireland and Gordon Brown with a proposal to offer a 50 per cent reduction in business rates to provide companies with capital for investment. He said that this measure could be made available to both indigenous and overseas companies.
"We need to look at the detail of the package that was announced, but there seems to be no real enthusiasm for a cut in corporation tax.
"I don't think we should get too caught up with that issue," he said.
A spokesman for Invest NI, Northern Ireland's industrial development agency, said that the level of corporation tax was only one element in the mix of incentives to enable its clients compete in the global economy and attract overseas investment.
He said it was important that Northern Ireland had a competitive fiscal regime to facilitate the agency's objectives.