Northern Ireland is facing a crucial decision that could potentially transform its economic landscape. The Federation of Small Businesses is advocating for a significant reduction in corporation tax rates to align with the Republic of Ireland, a move they believe could attract more investment and create much-needed jobs in the region.
Currently, Northern Ireland’s corporation tax rate stands at 25 per cent, while its neighbor to the south boasts a rate of 12.5 per cent for small firms and 15 per cent for large companies. This stark contrast has put Northern Ireland at a severe disadvantage when it comes to competing for investment.
Roger Pollen, FSB head of external affairs, emphasized the importance of aligning with the Republic of Ireland to boost the local economy. The FSB’s proposal includes a plan to gradually implement the tax reduction without deducting funds from the region’s annual block grant.
Despite the potential benefits of a lower tax rate, the decision to slash corporation tax in Northern Ireland may face resistance in the UK. Lorraine Nelson, a tax partner at consultancy BDO Northern Ireland, acknowledged the challenges of selling this idea to the British public.
Northern Ireland’s finance minister, Caoimhe Archibald, expressed openness to exploring new fiscal frameworks and devolving increased fiscal powers to the region. The UK government has also pledged to work closely with Stormont on this issue, recognizing the importance of addressing the economic challenges facing Northern Ireland.
As discussions continue and proposals are considered, the future of Northern Ireland’s economy hangs in the balance, with the potential for significant growth and prosperity on the horizon.