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BDO welcome for move on Corporation Tax

BDO Managing Partner Peter Burnside with Partner Nigel Harra
2nd December 2014
After a campaign which has been underway for well over a decade it likely that this week will finally see the political concession which many of us believe has the potential to begin a sustainable rebalancing of the Northern Ireland economy. David Cameron will say tomorrow that the power to vary the rate of Corporation Tax in Northern Ireland will be devolved to our Assembly. It is a political and economic milestone but in truth it is also the signal that the real work on this issue starts now. Securing the power to amend the tax is one thing, acting on it and delivering on its true potential is another and more pressing matter.

Too many initiatives and policies get stalled at Stormont, bogged down in political argument. The same must not be allowed to happen with Corporation Tax. There has been unanimous support for this power among the parties and let us hope that is a signal that there will be collective and quick action. There are hard decisions to be taken around how best to pay for the measure and while our MLAs have struggled with agreeing a budget and implementing public spending cuts, they did finally agree a draft budget.

It may be too much to hope for that background work has already been done and an approach agreed on where to find the initial funds required to make the investment in reducing Corporation Tax. Even so, the Executive must send an immediate signal that the tax will be reduced, by what level and in what timeframe. That strong message will be enough to begin the sales pitch which is required overseas among potential investors.

Invest NI has been doing a terrific job in attracting companies to Northern Ireland of late, but the incentives they can offer are now reduced in the face of changing EU regulations. Even if that weren't the case, Invest NI are effectively our corporate sales team and they need the best pitch possible. So in the scenario outlined above, where a date is set for a new, reduced rate to kick in, Invest NI teams across the globe can factor that into their arguments in favour of Northern Ireland as a location for investment. The lead in times for a major project can stretch to a few years in most cases a delay in implementing the new rate is not a major drawback, as long as the commitment remains strong. For too long we have looked on enviously at our neighbours in the Republic of Ireland as global firms have located in Dublin, Limerick, Galway, Cork and elsewhere, providing well paid jobs for a skilled workforce. A reduced tax, or the certainty that a reduction is on the way, levels playing field.

We know through our clients experiences that there is a tentative confidence returning to the private sector locally. It needs to be fostered, supported and facilitated.

Hopefully this week will see the sort of economic intervention that will lift Northern Ireland to a new level of economic sustainability. The results may come over a medium to long term, but a rebalanced and sustainable economy is on the horizon.
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