UK Labour Party backs Stormont’s move to set corporate tax rate

Labour’s Ivan Lewis pledged the party’s support subject to ‘acceptable level of scrutiny’

Legislation to cut Northern Ireland's corporation tax rate will be supported by the Labour Party, which guarantees that it will become law before the House of Commons finishes in late March, ahead of British general elections in May.

The legislation will give Northern Ireland the power to set its own rates, including the authority to match the Republic's 12.5 per cent rate if it chooses. It passed its Second Reading in the Commons on Tuesday evening without a vote being taken.

Until now, Labour has been less than enthusiastic about the new powers, consistently raising questions about Northern Ireland’s ability to replace the lost tax income with greater returns from an increase in new businesses.

However, Labour's Northern Ireland spokesman, Ivan Lewis, pledged the party's support "out of respect for the existing political consensus in Northern Ireland on this issue", as long as the legislation is subject to "an acceptable level of scrutiny".

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Northern Ireland's Secretary of State Theresa Villiers said Labour had been "distinctly lukewarm" about devolving authority to Stormont just a few weeks ago in the wake of the Stormont all-party talks' agreement.

Corporation tax devolution

“If he is now an enthusiast for corporation tax devolution, I welcome that and thank him for coming on board for a project which, of course, the

Conservatives

have been championing for many years,” she said. “It is great that Labour has seen the light at last.”

Ms Villiers rejected demands that Wales should get similar powers, saying Northern Ireland “is different” from the rest of the UK because of the Troubles and the Border it shares with the Republic.

Meanwhile, Scottish National Party MP Angus MacNeil said Scotland will inevitably win powers to cut its corporation tax rates when “we have a large Scottish National party group in Westminster”.

“The argument about the land border is a strange one,” he said, “because there are many places on land borders that have different rates of corporation tax. Logically, that could lead to a situation in which corporation tax was set island-wide in Dublin.”

The legislation will now go before a committee of MPs for line-by-line consideration.

Mark Hennessy

Mark Hennessy

Mark Hennessy is News Editor of the The Irish Times