Ulster Unionist Party Peer Lord Empey has said that the Stormont Executive must exercise the right to vary Corporation Tax with care, if as is expected, the power is devolved in the Chancellor's upcoming autumn statement.
Lord Empey said:
“It was the Ulster Unionist Party which initiated the call for the devolution and lowering of Corporation Tax. We called it a potential game changer for the local economy, when we first advocated the policy. The reason for seeking the power to vary Corporation Tax was, and remains, to create a level playing field with the Irish Republic when seeking Foreign Direct Investment. Unfortunately from 2011 to 2013 the matter became bogged down in technical debates with HM Treasury over the potential effect on our block grant, and the impetus for change was allowed to wither.
“Now that the Scottish referendum is out of the way it looks like the Chancellor and Prime Minister will announce that the power to vary Corporation Tax will be devolved. However now in late 2014, we are faced with the worst possible context for actually cutting the tax.
“The current financial omnishambles at Stormont means that going for an immediate reduction is just not practical politics or sensible economics- given the associated cut we would have to take off the block grant.
“Nevertheless we continue to urge Her Majesty’s Government to devolve the power. The decision about how and when the Stormont Executive would use the power to lower the rate is for another day.
“We could set our own rates for both large businesses and small businesses and lower it incrementally, as part of a 3-5 year plan.
“In any event, the main priority is to get the power: it will give Northern Ireland an insurance policy to be cashed in responsibly, when the public finances are put on an even keel. The challenge will then be for Invest Northern Ireland to get out there and attract the Foreign Direct Investment to create the private sector jobs which will transform our economy. The economics of the begging bowl must come to an end.”