Committee to look at NI corporation tax

03/08/2010

The Northern Ireland Affairs Committee at Westminster will be holding an inquiry into the rate corporation tax in the province, amid fears that the disparity between the UK and Irish rates will drive business away.

The rate in the Republic is just 12.5 per cent, compared to 28 per cent in the UK. It has prompted all the main parties to push for an exemption in the rate for Northern Ireland, to stop an exodus of new business over the border into the Republic.

Chancellor, George Osborne, has said he would consider a change and is eager to see the results of the inquiry.

Committee will examine subjects including the resultant benefits to the economy, the effect of reduced tax revenue and alternative measures to make the Northern Ireland economy more competitive.

The announcement of the inquiry comes just weeks after a government department revealed that lower corporation tax may have been a factor for losing as many as 21 companies that had been in talks with Invest NI – the body responsible for attracting investment – but subsequently went south.

The revelation substantiates the opinions of an independent think tank, the Economic Reform Group. They said a reduction in corporation tax was the only policy change which could lift Northern Ireland out of its economic rut.