DUBLIN: Cutting corporation tax will help create tens of thousands of new jobs and prosperity for all, Northern Ireland business leaders said.
Northern Ireland’s major parties have campaigned for powers over the rate at which business profits are taxed to be devolved from London to Belfast.
It emerged yesterday that the date for a tariff reduction, to 12.5%, will be April 2018, matching the Republic of Ireland in an effort to better compete for investment. Currently the rate is 20%.
In just over two years, Northern Ireland will have a lower tax take on company returns than the rest of the UK.
“This announcement will undoubtedly provide a key ingredient to energise the private sector as well as attracting a new generation of inward investment businesses, thereby creating tens of thousands of new jobs. It will boost prosperity for all, and transform our economic prospects,” commented CBI Northern Ireland chairman Colin Walsh.
The new agreement puts back the target date for cutting the tax by a year.
Advocates of a lower rate of tax on business profits in Northern Ireland point to a potentially transformative impact on a local economy that shares a land border with a jurisdiction – Ireland – where the tax is only 12.5%.
But critics claim reducing the local rate so significantly from the UK’s would damage public spending, as it would see the Treasury cut an estimated £300m off the Executive’s annual funding from the rest of the UK to offset the loss in revenue.
It could also help encourage businesses within the UK to relocate.
The British Chancellor has announced that the UK-wide rate will come down to 18% by 2020.
