The annual cost of implementing a reduced level of corporation tax in Northern Ireland could by significantly cheaper than has bene claimed, the lobby group backing the move has claimed.
Grow NI, an umbrella group formed to promote the devolution of corporation tax powers to the Assembly, accused the Treasury in London of overstating the costs to be borne by the province as a result of reducing the tax in a bid to encourage more foreign and local investment in the province.
The organisation which represents business organisations employing more than 200,000 people said its analysis of recent HMRC and Treasury figures had shown that the annual cost of a 12.5 per cent corporation tax rate may be closer to £192 million as opposed to the Treasury’s current estimate of £325m.
That figure would be less than two per cent of the Northern Ireland fiscal deficit and less than one per cent of Northern Ireland’s total public expenditure.
“Our analysis shows that by applying both published HMRC figures and recent Ministerial statements to the Treasury’s own calculations , the true cost of reducing corporation tax could be around £192m per annum, less than one per cent of total public expenditure in Northern Ireland,” said Grow NI spokesman Eamonn Donaghy.
“If our politicians could then negotiate an agreement with the Treasury to spread the early year’s costs of reducing the corporation tax rate over a number of years, the annual cash cost could end up being as low as £100m per annum.
“This issue must be worth exploring,” said Mr Donaghy.
The new figures come as Grow NI called on the Executive to explore the possibility of financing whatever gap emerges in public spending reductions when reduced corporation tax is introduced.
“The only growth in jobs in the near future will come from the private sector and reducing the corporation tax rate will result in tens of thousands of jobs being created over twenty years.
“ It is therefore vital that we work with our government partners to accurately determine the tax cost of reducing the corporation tax rate here in NI and explore innovative ways to finance any early year’s shortfall in tax receipts,” he added.