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Corporation Tax

Oral Answers to Questions — Finance – in the Northern Ireland Assembly at 2:45 pm on 17th October 2016.

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Photo of Gerry Carroll Gerry Carroll People Before Profit Alliance 2:45 pm, 17th October 2016

1. Mr Carroll asked the Minister of Finance whether he has any plans to lower corporation tax to below the current 12.5% rate in the Republic of Ireland. (AQO 474/16-21)

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

My response to question 1 is no.

Photo of Gerry Carroll Gerry Carroll People Before Profit Alliance

I thank the Minister for his quick response. Given the fact that the effective corporation tax rate in the South is, in reality, 3% due to loopholes, if the Minister's intention is to harmonise corporation tax across Ireland, is he not entering into a race to the bottom that will lead the Assembly to an effective rate of 3% as well in order to achieve that harmonisation?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for his supplementary. The answer to that is no as well. If we equalise corporation tax on the island to 12·5%, that is my intent and my resolve. You can be quite sure of this: when we reduce the level of corporation tax in order to create thousands of new jobs — 32,000, we predict, by 2033 — we will ensure that everyone pays their full taxation commitment. On top of that, I will emphasise to the business sector that it has stewardship of business in this part of the world. If tax is reduced, we want the increased profits to go back into investment, R&D and building better businesses.

Let me say this to the Member: I stood on the border at Newry last Saturday with Protestants and Catholics, unionists and nationalists, small business representatives, representatives of the farming sector and representatives of the third sector. People had gathered because they are very worried about the implications or ramifications of Brexit. I looked around for Mr Carroll to see whether he was standing with the workers, the small businesspeople or the social enterprises that have done so much to build up our communities, and he was not there. When it comes to standing with those who are working to create a better society, especially those in the border region who suffered long and hard over many years and are now enjoying the benefits of an open border, I can assure them that we will stand for job creation and with those who will benefit by obtaining employment in the time ahead, and we will stand resolutely for a shared and prosperous society in the future.

Photo of Philip Smith Philip Smith UUP

With Brexit likely to be implemented in 2019, has the Minister received any advice on whether the Azores ruling now even remains applicable? Will he give us a commitment that he will push to ensure that the £275 million cost to the Northern Ireland block grant in 2020, for instance, can be avoided?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank Mr Smith. I think that he asked two questions, but I will get to both of them. First, he is right that the Treasury, before it abandoned ship after the EU referendum and stopped talking to us, said that the cost to the block grant would be £270 million. I can assure Mr Smith — I will be asking every Member of the Assembly to support me in this — that when negotiations restart — I am meeting the Chief Secretary to the Treasury next Monday, which will give us a chance to say that we need this concentrated engagement again — I will be saying that it is unacceptable, that it is too high, that it factors in issues that we do not believe are relevant and that we will fight for an affordable, fair and proportionate deal.

I can assure him that, in the time ahead, while this is a matter for the Executive fighting to ensure that we get the best deal possible, there is a role for every Member of the Assembly. This was supported by all the parties and signatories to the Fresh Start Agreement. When I meet the Chief Secretary to the Treasury next Monday, I will be saying that we should have this engagement because we need a runway into a reduction in corporation tax and we want to get the maximum benefits for job creation. I hope that those parties that signed up to Fresh Start will remain resolute and supportive of my efforts at that time.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party

I thank the Minister for his answers. He and a previous Member to speak acknowledged the impact that a Brexit would have on our corporation tax strategy: it would leave it in tatters. Will he consider incorporating a sunset clause in any corporation tax proposals, so that if the prevailing context does not mean that we get these promised new jobs, at least we will not have to continue taking a hit from the public purse?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I do not know whether the Member read the papers at the weekend, but with the EU referendum and the discussion around a Brexit, there is certainly increasing uncertainty coming out of London, rather than clarity, in relation to the intentions of the British Chancellor. Let us not run away from the challenge in the time ahead, and let us not count our chickens before they are hatched.

Regarding the Azores ruling or sunset clauses, if we are speaking to the international business community and asking it to provide a vote of confidence and an investment in us by locating new business here, the last thing we need to do is to have a series of caveats in relation to the corporation tax strategy. We need to stay firm. Mr Hammond has been unclear about the level of corporation tax going forward, so that may change. If there is a change in our status within the EU, we will respond to all those things positively and constructively and, hopefully, as a corporate body, as an Assembly.

I will be in San Francisco at the end of the month to speak to potential investors. We should not say to them that our message is now getting mixed. It should be a very clear message. The Fresh Start Agreement commits us, as an Executive, to introducing corporation tax at 12·5% in April 2018 in a way that is affordable to our budgets, and I am confident in and committed to that goal.

Photo of Robin Newton Robin Newton Speaker

I must inform the House that questions 3, 8 and 13 have been withdrawn.