The Northern Secretary has launched a three-month consultation on transferring tax powers to the Stormont Executive.
Flanked by senior figures from the five main Assembly, parties, including four party leaders as well as the First Minister and Deputy First Minister, Mr Paterson called for the "rebalancing" of the Northern Ireland economy.
Citing the scale of the public sector and the North's dependence on the British Treasury's annual subvention, he said the current situation could not continue especially while the United Kingdom faced a huge debt burden.
The Treasury consultation paper cites Northern Ireland's "unique" economic position with a land border with the Republic's more competitive tax regime and the fact that the region is still emerging from nearly 40 years of conflict.
Treasury minister David Gauke reflected London's traditional conservatism on matters relating to overall UK taxation policy when he admitted: "It may well be the case that a lower rate of corporation tax in Northern Ireland can play a significant part in helping to strengthen the economy."
He added: "This consultation is a real opportunity for the people of Northern Ireland to talk this issue through, to balance these costs and risks with the potential transformative effects of lower corporation tax rates.
"It is a chance for Northern Ireland to set its own principles and priorities and to play a more direct role in determining the competitiveness of its economy."
With strong political and business support for the transfer of some taxation powers to Stormont in evidence yesterday, the consultation is aimed at advancing the debate on the appropriate level of corporation tax for Northern Ireland relative to the 12.5 per cent currently levied in the Republic as well as other measures.
Under EU rules any cut in tax would have to be matched by a corresponding cut in the annual block grant currently worth about £9 billion (€10.2 billion).
Mr Paterson believes cutting tax is an important element of measures to boost the wealth-creating sector of the economy and increasing the overall size of the Northern Ireland tax-take through economic growth.
Addressing the consultation launch Peter Robinson admitted: "Despite some economic successes in recent years we have not transformed the economy the way we would have liked. We therefore need to look elsewhere and that is what we are doing now.
"We want a debate on all of these issues, costs, benefits and impacts and we would encourage all interested stakeholders to respond to the issues and questions raised."
Deputy First Minister Martin McGuinness said: "Lowering corporation tax is, however, not the only vehicle open to us and this paper presents a range of other tax measures. It is crucial that we strengthen the private sector, attract new investment and increase economic growth while maintaining investment in the public sector."
Finance minister Sammy Wilson was not in attendance, but in a statement he said Treasury estimates at the likely impact of a corporation tax cut could be well below the mark. "The [consultation] document does recognise that opinions on this do differ making consultation views on this crucial," he said.
"The estimated costs and impact on the block are also significant - at the upper end of all previous estimates. Practically speaking we would have to look at how we could manage these, making the options where the reductions would be deferred or phased in over several years after any decision vitally important to minimise any impact on public services."
Consultation runs until June 24th with the Treasury reaction and government response expected in the autumn. Legislation, which would be needed to transfer tax-varying powers to Belfast could follow in early 2012.