Why I Care About Lowering Corporation Tax in Northern Ireland
A recurring theme in the recent Assembly election was the potential reduction in Northern Ireland’s Corporation Tax rate. On the surface this seems like a great idea, but Danny Moore’s recent post about the ‘GrowNI’ campaign to lower corporation tax made me realise that I mightn’t understand all the details. A decrease in tax has obvious benefits, but what are the implications, and what could I contribute to a government consultation on the subject?
Having read the HM Treasury consultation paper, I feel better enlightened about what a rate reduction means for Northern Ireland. In his post, Danny challenges our leaders – describing devolved Corporation Tax as a ‘once in a lifetime’ opportunity for NI, however it isn’t a political no-brainer. There are risks to consider, and brave decisions to be made.
A Corporation Tax rate reduction should lead to greater investment in our private sector, but will mean that we have to balance the risk of losing tax income from the NI ‘block grant’ with the potential that more investment can bring for increased employment, sustainability and growth, not to mention consequential improvements in social and education/skills standards. In the long term, the loss of tax income should therefore be offset by greater income tax receipts, more VAT as people spend more, and lower welfare costs as disadvantaged people gain access to jobs and learning.
In addition, a drop in corporation tax could help Northern Ireland finally ‘do it’s bit’ in rebalancing the UK economy. Instead of being a drain on the economy, our ability to contribute positively is strengthened. Its really worth reading the document to understand how the supporting framework for a drop in Corporation tax could transform our attitude towards entrepreneurship and innovation.
These are all good reasons for anyone to participate in the consultation process and lend their support to the campaign. Here are two personal perspectives.
Firstly, I am proud to be Northern Irish and I want to create and build businesses here. We have the building blocks of a thriving startup ecosystem, with no shortage of ideas and bright, skilled people. This can be the turning point that makes market failure a thing of the past, and allows creative, talented risk-takers to stay in Northern Ireland whilst making their mark on the world.
Secondly, such a bold move by our political leaders will be inspirational, something I feel is sadly lacking at present. Decisive action on Corporation Tax can demonstrate tangible evidence of a new vision for a Northern Ireland that has left its tribal roots in the past, a place with a new excitement and ambition.
This is not a time for prevarication, posturing, or repeats of previous miserable failures (think Review of Public Administration, Replacing 11+) – our leaders need to embrace the risk, devise a plan, and commit now to making this work.