The chairman of Sinn Fein has given the first concrete indication that the party no longer supports cutting corporation tax.
Declan Kearney said that the Government’s central policy – for which it received a mandate in last month’s general election – of cutting public spending over coming years meant that Stormont “will not be able to afford” the hundreds of millions of pounds in tax revenue which it would lose if it cut business taxes.
Writing in Sinn Fein’s newspaper, An Phoblacht, Mr Kearney savaged the Conservatives’ proposals for further cuts in public spending, claiming that they would create a “virtual economic tsunami” which could overwhelm the Northern Ireland economy.
“One direct consequence of the ongoing austerity crisis is that, in these circumstances, the regional economy will not be able to afford the introduction of corporation tax even if a date and rate were to be agreed,” he said.
“Moreover, the level of cuts on track will also wipe out the financial assumptions upon which the local budget is predicated.”
The article, which comes ahead of Stormont’s so-called ‘provisional budget’ being debated in the Assembly on Tuesday, confirms months of hints that Sinn Fein had taken cold feet about the vast cost of slashing corporation tax from 21 per cent to 12.5 per cent, to bring Northern Ireland into line with the Republic of Ireland.
Grow NI, an umbrella group representing the main business groups in Northern Ireland, said that 100,000 jobs had been created in the Republic over the last four years, with the 12.5 per cent corporation tax rate a “key reason” for that.
It said: “Not introducing the same rate here denies people in the North the same opportunity to take up employment which is available to people living in the South.
“The delay in setting a date for introducing a reduced rate has already resulted in deferred investment decisions from both foreign investors and local businesses, delaying, possibly permanently, the creation of new jobs. The long-term cost of not setting a date for the introduction of a reduced rate of corporation tax grows day by day.”