View: Corporation tax powers key to resolving NI Rubik’s cube

Its popularity means that its complexity and simplicity have become a metaphor for tricky situations – perhaps none more so than the conundrum of Windsor Framework, resurrection of the Stormont Executive, our perennial budget deficit, and our economic under-performance. In resolving this puzzle, one winning move that should be deployed is devolution of corporation tax powers.

A decade ago FSB led the calls for this policy change, at a time when the UK’s CT rate was 28%, whereas our neighbours south of the border were paying just 12.5%. At that time, a majority of FSB NI members were NOT incorporated, so didn’t pay corporation tax, but the majority also thought that devolving the powers and cutting the rate was the right thing to do for NI; a policy recommendation made not out of self- interest, but because it was right for the economy.

We had many allies in that campaign who came together under the banner ‘GROW NI’, including all of the main business organisations, academics, and other stakeholders. Each of the five Executive parties also pledged their support – captured on video at the time to make sure these weren’t just fair-weather commitments.

That lobbying led to the ‘Corporation Tax (NI) Act of 2015’ - a significant achievement. Sadly, the collapse of the Executive in 2017 meant it was never implemented, however, not only is all not lost but, in fact, the time is now ripe, as devolution of many tax powers has matured in recent years, with both Scotland and Wales securing different powers as befit their needs.

Here, the confluence of Windsor Framework, NI budget deficit, and the need to restore Stormont and give it the means to balance its books by growing the economy, make corporation tax-varying powers one of the key measures we should secure. Brexit, the NI Protocol, and even the Windsor Framework do, indeed, mean that NI holds a different position from other parts of the UK; but just like freeports and investment zones, we should aspire to ensure our differences give us a competitive edge.

We share an island with an economy where the CT rate is now half that of ours. If investors are to be attracted, that differential means we are hampered in competing, irrespective of other market access opportunities. Giving effect to powers over CT would help make good on the Prime Minister’s ambition ‘to make Northern Ireland the most exciting economic zone on the planet’ – but, without them, we remain destined to the slow lane and fail to make the most of our potential.

In parallel, is the embarrassment of the NI budget deficit. Much has been made of the need to raise more money locally, yet to do so from the population of the UK with the lowest disposable income, without making transformative changes, would be folly. However, just as with the final twists of the Rubik Cube, where all falls into place so, too, could economic transformation be achieved by investing in a reduced rate of corporation tax. This would provide the means to grow the economy - allowing more money to be raised locally and many societal issues such as our high economic inactivity, lower business start-up, and poor productivity to be addressed.

Our position, with unique access to two of the largest markets on the planet; thousands of potential workers available if we implement strategic interventions such as childcare; quality tertiary education capable of delivering the skills needed for incoming investors; underpinned by a competitive rate of corporation tax could, Rubik-like, let order emerge from chaos and see NI become both the leading UK investment destination as well as an energised location for businesses.

FSB has never wavered in its commitment to the policy but, with the NI Investment Summit in September, now is the time to act. The process required is a simple legislative Order at Westminster; so the opportunity exists in the first week of September, when Parliament returns, to make this change and help business to play its part in growing the economy, so politicians can have the resources to re-engage and transform this place.