Corporation tax cut calls expected

Image caption,
Cutting corporation tax could stimulate inward investment

Business experts are expected to support calls for a reduction in corporation tax in Northern Ireland.

Speakers such as Eamonn Donaghy of KPMG and Martin Fleetwood of PWC will give evidence to the Northern Ireland Affairs Committee later on Wednesday.

The committee is investigating whether the rate should be cut to match the rate in the Republic of Ireland.

The main rate of corporation tax in the UK is 28% for 2010, while corporation tax south of the border is only 12%.

Business leaders and politicians have argued that this puts Northern Ireland at an unfair disadvantage.

Block grant

The witnesses are expected to give evidence that by putting the tax in line with the Irish Republic, the Northern Ireland economy would be stimulated and inward investment would increase.

However, there is the issue of what a rate reduction would cost and who would pay for it.

There are worries that such a move would lead to a reduction in the block grant allocated to the executive from London.

Some economists say it could cost about £200m, but Finance Minister Sammy Wilson said earlier this month that the cost to Northern Ireland could be as high as £500m.

Eamonn Donaghy from KPMG said the "key focus of our campaign is very much in trying to make Northern Ireland a very attractive place for foreign direct investment".

"That seems to encourage international businesses to look at Northern Ireland as a place to locate.

"The real objective of this is to try and find a way of bringing jobs into Northern Ireland.

"Long term sustainable, well paid jobs, which I think, given what was announced last week has probably got to be one of the key objectives for everybody in Northern Ireland, politicians and businessmen alike."

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