The Treasury has published a summary of responses received to the consultation “Rebalancing the Northern Ireland Economy” which was conducted over the summer. The main focus of this consultation was on a reduced rate of Corporation Tax for the province. Over 700 responses were received to this consultation, with a strong majority in favour of a separate Corporation Tax regime for Northern Ireland.
Of the responses received, 377 came from businesses or individual business owners, 192 from private individuals and 50 from accountants and accountancy firms. The very high number in the last category may be indicative of some success for Chartered Accountants Ireland in encouraging member firms to respond.
Three quarters of respondents were in favour. There was opposition from some trade union groups and private individuals.
Many of the arguments both for and against the devolution of powers as summarised in the response to the Consultation will be familiar to Chartered Accountants. However, there seems to have been universal criticism of the cost estimates put forward of devolving the Corporation Tax rate in the original Consultation Document. It seems that no one was satisfied with these figures, criticising them as too high or too low depending on the point of view expressed.
The Government has not taken a decision to devolve Corporation Tax. A Ministerial Working Group is examining the issues arising from the consultation, and is expected that this Group will conclude in summer 2012. The Working Group comprises Ministers from HM Treasury, the Northern Ireland Office and the NIE.
The current Government position, as set out in the Treasury document, indicates that it is in favour of improving fiscal accountability in the devolved regions, but wants to ensure that existing incentives for trading in the UK are not prejudiced and that the competitiveness of the UK as a whole is maintained.
However it seems, distilling down the observations of the Response Document, that there are two main issues that require further consideration. The first is political – the extent to which devolved powers may be granted to Northern Ireland and possibly not to other regions within the United Kingdom. The second is economic and entails arriving at an accurate measure of the cost of a devolved Corporation Tax rate in Northern Ireland. It is anticipated that the Ministerial Working Group will seek to resolve these issues during the early part of 2012.