Brown is warned over North’s
economy
British Chancellor Gordon Brown has been put under pressure to cut the
30 per cent corporation tax rate in the North of Ireland to the 12.25
per cent rate in the Irish Republic.
The Economic Research Institute of Northern Ireland (ERINI) has recommended
that the standard 30 per cent corporation tax rate be retained but that the
first 60 per cent of profits be exempted.
This would give businesses in the province an effective rate of 12 per cent
— roughly the same as their next-door neighbour to the south.
The corporation tax cut issue has been put on the agenda as part of the
peace process in the North of Ireland and from intensifying pressure from
businesses for a peace dividend to help the province compete with its
lower-taxed neighbour over the border.
The basis of the ERINI’s argument is that Ulster’s economy is doomed to
continue to underperform and will continue to require further large
subsidies from the government in Westminster unless tax rates are lowered.
Under the new proposals there could be substantial gains for the North’s
economy by way of new companies deciding to establish a base there, from
fresh job creation and from a striking revenue uplift through higher VAT and
income tax receipts.
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