A CONSULTATION paper on transferring powers to levy lower rates of corporate tax in Northern Ireland is “virtually completed” and will be published shortly, Northern Secretary Owen Paterson said yesterday.
Speaking after his US St Patrick’s Day round of meetings, Mr Paterson said he had discussed the proposal to transfer tax-varying powers with Peter Robinson and Martin McGuinness in Washington.
He said the decision to publish the paper and to call a consultation period was a decision for the treasury in London as it is responsible for drawing up the proposals.
However, he said he hoped the consultation would begin “very soon” after this Wednesday’s British budget statement – which may well address corporate taxation in general – by chancellor George Osborne.
“It’s been a long preparation getting this paper ready, he told BBC Radio Ulster yesterday. “It’s extremely complicated, but it’s nearly there and I would like to see the consultation start as soon as possible. But it will be after the budget.”
Mr Paterson has made little secret of his desire for Stormont Ministers to accept tax-varying powers that could make Northern Ireland the first among the devolved UK administrations to set a key tax level.
“Northern Ireland could be the first to plant the flag on this issue,” a trusted Stormont source said.
The First Minister and Deputy First Minister should not be too surprised when they finally get the paper detailing the treasury’s corporation tax proposals.
Last December they received details of what could be in such a paper and they are already aware of the British coalition government’s keenness to see the heavily public sector-reliant Northern economy “rebalanced” in favour of private enterprise.
Cutting the current rate of 28 per cent in the North to make it more competitive when compared to the Republic’s 12.5 per cent is complicated, a source said. “There is lots of work still to be done.”
Among issues that need to be addressed are implications under EU rules and the scale of the British block grant that funds Northern Ireland. European rules prohibit “favourable” tax regimes within individual member states, which means that cutting corporation tax could also lead to a cut in the British £9 billion-plus annual subvention. The power to cut tax in Northern Ireland would also require Assembly support and Westminster legislation.
If Mr Paterson’s wish and tax-varying powers are transferred, sources insist this in itself is no “silver bullet”.
“This is not the alpha and omega,” the source added, citing the host of other ideas that the British government has repeated since coming to power last May.
There remains much talk of creating a Northern Ireland enterprise zone, further investment in infrastructure, capitalising on links – physical, political and financial – with the outside world in general and the US in particular.
The Kelvin project, a new dedicated high-speed internet link which connects Ireland directly with America, is based in Derry. US economic envoy Declan Kelly remains a key diplomatic figure in the drive to bridge the divide between Northern Ireland and potential investors and markets across the Atlantic.
However, as he reminded key figures in the Northern business community in January, there is an onus on local people to become the author of their own economic salvation. “You must realise that a transformation of the Northern Ireland economy needs to take place,” he said.
“You, the private sector, must be the driving force behind this change. It’s no longer somebody else’s problem. The reality is this is the time to take a brave step forward and start investing in your own future.”