03/06/2011

Corporation Tax 'Con' Highlighted

The debate over a possible reduction in NI's rate of corporation tax to better match that of the Irish Republic is continuing with a NI House of Lords independent crossbencher saying the public is being "conned" by the pro-tax cut campaigners.

The former Ulster Unionist and current Press 'baron', John Taylor [Lord Kilclooney] claimed that "95% of the population of Northern Ireland who are not company directors would be worse off" if the mooted reduction is implemented.

Mr Taylor, (pictured) told the House of Lords that a recent report by the Treasury said cutting corporation tax could mean a fall in the block grant of up to £300m a year in order to drop the current rate of 28% to one closer to the 12.5% in the Republic.

As the head of the Alpha Group, a thriving newspaper business based in Co Tyrone, he said there were other factors which would dictate where a company might set up, such as labour costs, energy costs and availability of skilled labour.

Speaking on BBC NI this morning, he reiterated an example from the Irish Republic and said: "Dell withdrew several thousand jobs from the Republic, albeit with a 12.5% corporation tax rate to relocate in Poland, with a 19% corporation tax and more recently HP - the USA technology giant with plants in Galway, Leixlip and Belfast - opted to select Belfast with its higher corporation tax as its new global centre of software excellence."

He insisted that claims that a low rate of tax would create 90,000 new jobs, over 20 years was not realistic and slammed the NI Secretary of State, Owen Paterson and what he described as a Sinn Fein/DUP partnership for blindly supporting the plan which would see NI's block grant severely reduced.

He said the jobs estimate was: "At best, wishful thinking" and that a reduced block grant from the Treasury to Stormont "will hurt the 95% of Northern Ireland people who are not company directors".

Lord Kilclooney said politicians "should be on the side of the ordinary people - the majority in Northern Ireland - and expose the risk of a lower corporation tax".
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The peer also accused Mr Paterson of being motivated by a desire to ensure the Treasury saved money on Northern Ireland through a cut in the block grant and hinted at a concerted plan to 'hoodwink' the population.

"Interestingly, the three daily newspapers in Northern Ireland carried identical statements from six business spokesmen - i.e., all supplied to each paper from the one source - in order to con the wider population."

Supporters

Both the DUP and Sinn Fein have been vocal in their backing for a cut in the rate of tax on businesses to aid inward investment.

However, just this week, the Sinn Fein Enterprise Spokesperson, Phil Flanagan, an MLA for Fermanagh & South Tyrone has urged caution.

He said that any potential reduction to the level of tax must not be done in isolation but must be considered as part of a wider economic regeneration programme.

Speaking at the Enterprise, Trade & Investment Committee meeting in Stormont, Mr Flanagan said: "The possible transfer of corporation tax powers to the Assembly has largely been welcomed by the business sector.

"However such an eventuality should not be viewed as a panacea for all our economic woes. It must be considered only as one piece of the recovery jigsaw.

"In conjunction with a reduction in corporation tax, there needs to be a focus on a job creation strategy that will ensure people are adequately skilled for future opportunities," he said.

Noting that the NIO Secretary of State, Owen Paterson was in Enniskillen earlier this week speaking with the local business community, the MLA said Mr Paterson received a wide range of views on corporation tax.

"As a representative for a rural constituency, I will work to ensure that any potential reduction in corporation tax will have a beneficial effect for those indigenous businesses in my constituency as well as the direct investors based largely around greater Belfast," he concluded.

However the two main NI parties are not alone in supporting change with, Mike Nesbitt, an Ulster Unionist Party (UUP) member of the Assembly's Enterprise, Trade & Investment Committee also backing a revision, saying: "The UUP calls for the power to vary corporation tax to be devolved to the Northern Ireland Assembly."

See: NI Corporation Tax Amounts 'Unknown'

(BMcC/GK)

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