THE NORTH’S Minister for Finance Sammy Wilson has warned that equalising corporation tax with the South could cost the Northern Ireland economy more than £300 million (€350 million) annually in a reduction of block grant from the British treasury.
Mr Wilson admitted yesterday to being “lukewarm” about bringing the North’s level of corporation tax – which varies between 21 per cent and 28 per cent, depending on company size – in line with the 12.5 per cent rate applying in the Republic.
The Minister, addressing the Assembly, warned that there would be a cost for the North being allowed reduce its level of corporation tax and this would mean a reduction in its annual grant from Westminster.
Mr Wilson referred to how the Westminster spending review is expected to lead to a reduction in spending of £4 billion over the next four years. “I think a further hit on top of what we have already taken in the budget review would be more than the economy could bear,” he said.
“If the cost of devolving corporation tax is such that it damages the economy in the short run at a time they are already facing big cuts in the public sector spending, then I don’t think it is worth doing,” he said.
“What we have got to do is find ways in which the potential long-term benefits of corporation tax can be obtained without the short-term pain,” he said.
Mr Wilson said there could be alternative ways of promoting jobs investment other than lowering corporation tax.
Equally, discussions would continue with the British treasury to try to strike a better deal that could allow for reducing corporation tax.