The prospects for lower CT – clarification urgently needed

On reflection, I agree with the comments that David Cameron did not necessarily go so far as the Bel Tel claim that he had “dropped a heavy hint that calls for a cut in Northern Ireland’s corporation tax would be kicked into the long grass as a result of the collapse of the Irish economy.” On this important point, his reported remarks are far from clear – nor does he appear to have been pressed for clarity – and he may indeed have simply been saying that the final terms of the bailout have to emerge and an Irish budget passed before a decision is taken on a differential rate of corporation tax for Northern Ireland.

Certainly the Executive and the Assembly aren’t behaving as if the plan has been kicked into any long grass. Peter Robinson seized the opportunity of Treasury consultations on the bailout to press NI’s case. (By the way, Bel Tel, Mark Hoban Financial Secretary to the Treasury is a minister not an “official”).

The first minister has said the British government should allow NI to relax corporation tax following its decision to give a loan to the Irish Republic.

Peter Robinson said it would be difficult to justify making the Irish economy more competitive while it had a more advantageous business tax rate.  

We’re  now in the peculiar situation over CT whereby the FM and the DFM, as a result of the British contribution to an Irish bailout, are arguing in favour of  NI  enjoying the same or similar company tax arrangements as the Republic; whereas quite a lot of cross party opinion at Westminster is against the Republic retaining the lower rate for precisely the same reason.

Call me old fashioned but it would great  if the local media tried to clear this up. For a start they could try to relate the PM’s comments to the First Minster’s and ask both Downing St and Stormont Castle for clarification, rather than run two bald little disconnected stories in successive nights, relying on quotes with little context to report the whole subject. A follow-up question for both them and the NIO would be: what chance is there now of producing the recovery strategy before Christmas? ( I’m only glad to help.)

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  • DC

    The thing is, it is actually this Tory back bench pressure which is likely to bring it about more rather than reducing the chances of it; plus the EU member states loathe it.

    Seriously, may as well have 12.5% tax take for Britain in NI than lose all those pharmaceuticals to Ireland anyway – and going they are.

    Fors and againsts are swirling around at the moment, Cameron is prone to u-turning in the face of a good argument.

  • Drumlins Rock

    there could be a case for bringing it in across all of the UK excluding the south east.

  • pippakin

    I think Cameron knows a great deal more than we do about what is going on in the south. It maybe he is waiting and will match whatever this appalling government does (is allowed to do)

  • Cynic

    What is the justification for treating NI differently from the brest of the UK? why not do it everywhere in UK and watch the jobs roll in. It wouldn’t even have to be 12.5% – around 15 -20% would do.

    It would also deeply annoy the French …which must be good

  • DC

    I think therein lies the problem – it would piss off most of Europe just like Ireland does by doing it.

  • Reader

    Cynic: What is the justification for treating NI differently from the brest of the UK? why not do it everywhere in UK and watch the jobs roll in. It wouldn’t even have to be 12.5% – around 15 -20% would do.
    An immediate sacrifice of 20 billion pounds Corp tax per year across the UK may not be a good deal to attract 20,000 FDI jobs and some brass plates, whereas losing a couple of hundred million pounds in NI to attract the same 20,000 jobs and brass plates may well be a good deal.
    There is definitely no economy of scale in this game!
    Cutting Corporation tax to encourage business growth is a different calculation, more proportional. Even so, it may be tempting to carry out a local experiment so see how well it works, and how fast.

  • Neil

    What is the justification for treating NI differently from the brest (hey hey) of the UK? why not do it everywhere in UK and watch the jobs roll in. It wouldn’t even have to be 12.5% – around 15 -20% would do.

    They could introduce it in a staged fashion, thereby reducing the immediate impact of lost revenues. It would also allow for ministers to decide what the appropriate level is, where the maximum gain can be made with the minimum loss.

    It would also deeply annoy the French …which must be good

    Unfashionable and all as it may be, I have to go along with ye on that one.

  • What is the justification for treating NI differently from the brest of the UK?

    The Brest of France is located in Finistère, Brittany, not the UK. Now Cynic, I am not surprised you will have annoyed the French