Last Wednesday, representatives from the Institute met with members of the Northern Ireland Assembly’s Finance and Economy Committees in Stormont to discuss the Institute’s ongoing campaign to reduce the corporation tax rate in Northern Ireland.
The Institute spoke about the need for a coherent long term industrial policy in Northern Ireland that attracts investment, creates secure, well-paid jobs, and fosters innovation and entrepreneurship. As part of this overall industrial strategy, Northern Ireland needs to reduce its corporation tax rate and provide policy certainty for potential investors.
The feedback from members of each committee was positive and informed. It was clear that they are deeply committed to improving the economic environment in Northern Ireland and the living standards of all citizens.
The key issues and Institute stance
Addressing the challenge of the impact on the block grant that Northern Ireland receives every year, the Institute outlined various measures that could be utilised to mitigate the block grant reduction, most notably the use of a low interest loan from Westminster to manage the initial drop in corporate tax revenue that would arise immediately after a corporation tax rate reduction. Phased introduction of a lower corporation tax rate could also be implemented to reduce the immediate impact on the block grant.
From an economic perspective, previous research from the ESRI shows that a reduction in corporate tax rates would increase investment in Northern Ireland by 7.5 percent which would also lead to substantial employment opportunities for people in the region.
Progress to date and next steps
The next step is to take the campaign to Westminster to push the agenda forward. As part of this, the need for cross party support to reduce Northern Ireland’s corporation tax rate is crucial in order for progress to be made with HM Treasury; this point was also highlighted during last Wednesday’s meeting.
To begin progressing the issue nationally, last November the Institute wrote to the Exchequer Secretary to the Treasury on this issue which highlighted that the ultimate aim of a lower rate is for it to become self-funding in the longer term, but that initially it would necessitate a replacement loan at a low interest rate from HM Treasury to fund the necessary block grant reduction.
To date, the Institute has met with a broad range of stakeholders on this issue and has now met with all the major political parties represented in the Northern Ireland assembly.
Last year the Institute launched its refreshed campaign for a lower corporation tax rate when it published its position paper ‘Enhancing Our Competitiveness: The case for a reduced rate of corporation tax in Northern Ireland’.
Share your experiences and insights
If you work in a local business and would like to participate in the Institute’s campaign by being a voice of support for a lower rate, contact us by email.
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