Autumn Statement 2014: Northern Ireland may get tax power

PA/AOL Money
Close up of British pound coin and currency
Close up of British pound coin and currency



Chancellor George Osborne is today expected to indicate whether the power to set business tax rates will be devolved to the Northern Ireland Assembly.

The issue of devolving corporation tax to the region is set to feature in the Chancellor's Autumn Statement.

Ministers in Belfast are hopeful of a positive outcome but there is no certainty on whether the responsibility will definitely be transferred - and, if it is, if there will be conditions attached by the Government.

Autumn Statement: what to expect

The Executive has identified the power as a potentially key economic lever to attract new business investment and therefore drive private sector growth in a region viewed as overly-reliant on the public sector.

Ministers have stressed that Northern Ireland is a special case in terms of the rest of the UK as it shares a land border and therefore directly competes with the Republic of Ireland, where business tax rates are significantly lower.

But the issue is far from straightforward.

Any loss in revenue generated from cutting corporation tax from the UK rate of 21% to the 12.5% that operates across the Irish border would result in a reduction in Northern Ireland's block grant funding allocation from the Treasury.

So ministers at Stormont will have to determine whether the economic stimulus they hope to deliver will, at the very the least, off-set a loss to the public finances that could be in the region of hundreds of millions of pounds annually.

Unions have warned against taking such a hefty chunk off public spending and a leading businessman has also expressed doubts.

Noting the political travails at Stormont that have seen ministers at loggerheads over a range of issues, Bro McFerran, managing director of insurance company Allstate NI, has questioned whether the Executive has the political maturity to handle the responsibility.

Yesterday Stormont finance minister Simon Hamilton said he was hopeful that Mr Osborne would hand over the power.

He told Assembly members: "We would expect a final decision tomorrow and I am hopeful, given the robust and compelling case that Northern Ireland has made, not just in terms of re-balancing our economy, the need to rebalance our economy, but also the fact we have a unique situation as the only part of the United Kingdom sharing a land border with a state with a significantly lower rate of corporation tax, I think that that compelling case stands on its merits and I hope we get a positive decision from the Chancellor tomorrow."

Corporation tax was not among the powers recommended for the Scottish Government in last week's Smith Commission report on beefed-up devolution

Scottish First Minister Nicola Sturgeon has said she would welcome Northern Ireland getting the powers but at the same time would question why Scotland was not granted them.

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