Renewed calls to harmonise tax rates across Ireland

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The Independent Online

The UK Government has rejected renewed calls to harmonise corporate tax rates across Ireland, a move that proponents claim would boost investment in the North.

Sir Anthony O'Reilly, the chief executive of Independent News and Media, which publishes The Independent, has called for the Northern Ireland Executive to be given greater powers to change corporate tax rates, warning that the province risked being left behind the Republic of Ireland as an attractive place to do business.

Speaking at the US-Northern Ireland Investment Conference at Stormont, which brought business leaders together with politicans including the UK and Irish prime ministers over the past two days, Sir Anthony said Ulster deserved a "level playing field" with the Republic. While corporation tax in Northern Ireland is charged at the same rate as the rest of the United Kingdom, at 28 per cent, Dublin has reduced its tax rate to 12.5 per cent. A number of British companies, including United Business Media and Shire, the UK's No 3 pharmaceutical group, have announced recently that they intend to move their tax domicile from the UK to Dublin.

Sir Anthony said Northern Ireland deserved particular attention after emerging from decades of under-investment. "Why should Northern Ireland be singled out for special treatment on tax? The answer is obvious. No other part of the UK is emerging from 35 years of conflict and now has to urgently make up for generations of lost time."

Although an all-party consensus has developed in the Northern Irish Assembly calling for an extension of its fiscal power, Gordon Brown ruled out ceding tax-altering autonomy to the assembly, which would involve re-negotiating the terms of the Good Friday Agreement. The UK Government instead points to last December's Varney report, written by the Treasury's highest- ranking civil servant, Sir David Varney, which argues that there is no need to cut corporation tax in Ulster. "We have tested the Erini [Economic Research Institute of Northern Ireland] conclusions using a range of different approaches to assess key variables. All these results lead to the same conclusion that, on the basis of costs and benefits for Northern Ireland alone, there is no clear and unambiguous case to cut the corporation tax rate."

Sir Anthony said: "The review ... quite simply showed no understanding of what makes business tick, nor the importance of tax as a factor in competitiveness."