Secretary of State Owen Paterson has appealed to the people of Derry back moves to devolve corporation tax powers to Stormont.
During a visit to the city on Thursday, the Tory MP said stated the “vital” importance of everyone submitting their views to the British Treasury before the end of the consultation period on plans to devolve the tax powers.
Mr Paterson highlighted the benefits of lowering the corporation tax rate in line with the Republic of Ireland’s 12.5% when he met with key business figures and traders in the Waterfoot Hotel. The meeting followed a breakfast briefing with the city’s business leaders.
“I’m very keen on the traders, everyone of them, every one of their suppliers everyone of their customers writing to the treasury before .
“It is absolutely vital that the Treasury get a overwhelming message from everyone in NI - whether they pay corporation tax or not - that this will be a game changer.”
He said is was important that the North’s economy makes the next step in its regeneration. “We have a number things going for us now in NI - the peace process has delivered stable institutions, we’ve got state of the art telecommunications, airlinks, two cracking universities and a good education system but time and again I go to businesses and they find they cannot compete with 12.5% corporation tax over the border. The border areas particularly suffer from this problem of investment time and again.
“We have big businesses going to Letterkenny on the basis of lower corporation tax. This would be a game changer it would have an enormous impact, it was obviously help existing companies which pay corporation tax, it would absolutely guarantee to bring in business from, outside that aren’t coming here but most importantly this will float prosperity into every corner of Northern Ireland.”
The Treasury consultation on the proposal runs to the end of this month.
Finance Minister for Finance Sammy Wilson has warned that lowering corporation tax must not be “debilitating” to the North’s economy. He told business people at Stormont this week that harmonising such tax rates with the South could cost the North up to £385 million annually in reduced subvention from Westminster.
Mr Wilson said while the Northern Executive favoured reducing corporation tax there was a “huge amount of uncertainty” over what would be the impact of such a move on jobs, investment and public expenditure.
However, Mr Paterson told the ‘Sunday Journal’ that he believes the figure is “very modest” in light of the potential for gains from a reduced corporation tax rate, adding: “there is no plan B”.
“I think everyone is exaggerating the impact of this figure. The state spends 19bn in NI per year, the block grant is 12bn - if you reduce corporation tax by 2.5% it costs you only £60m that is 0.5% of the block grant. As an investment in the future to bring new business in and rebalance the economy which is massively over dependent on public spending at the moment that figure is very modest investment. There is no plan B - there is a very tiny number of people who attack me publicly but they have no alternative.”