UK Minister says corporation tax cut should not benefit banks

Deputy First Minister Martin McGuinness has said NI banks should be denied any benefits from potential cuts in corporation tax.

A consultation paper examining the case for lowering corporation tax rates in NI was published earlier.

Low rates of corporation tax are considered an important means of attracting overseas investment.

However, the Treasury has said giving NI the power to set the tax rate could cost the Executive up to £300m a year.

All the main Northern Ireland political parties are in favour of being given the powers.

The overall UK rate is 28% and will fall by 5% over the next four years, but will still be much higher than the 12.5% rate in the Irish Republic.

If corporation rates were set locally, companies already located in NI, including banks, would pay less tax on their profits.

The Treasury said the shortfall would have to be made up by the Executive.

However, the deputy first minister, Mr McGuinness, said the banks should be excluded.

“I would hope the banks wouldn’t benefit from this,” he said.

“I think it’s a duty and a responsibility on us, as we negotiate this through, to ensure that the full benefit of this goes towards the people that we represent and not towards those who in my opinion have effectively betrayed the people in the course of the recent past.”

Ultimately the Treasury will have the last say on whether Northern Ireland will be given the powers to set its own rates of corporation tax.

‘Unique circumstances’

Its consultation paper published earlier cited Northern Ireland’s “unique circumstances” which could justify the move including its large public sector, the economic legacy of the Troubles and the land border with Ireland.

Welcoming the publication, First Minister Peter Robinson said: “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 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,” he said.

The consultation period will last until June 2011. The government, in consultation with the Northern Ireland Executive, will then make decisions bearing in mind the responses received.

Copies of the paper are available via the Treasury website.
Source: BBC