22/02/22

IRELAND: Sinn Fein favours a single 12.5% corporation tax for smaller firms on both sides of border.

As published on belfasttelegraph.co.uk, Tuesday 22 February, 2022.

Sinn Féin favours a single 12.5% corporation tax rate for smaller firms on both sides of the Irish border, its finance spokesman has said.

However, Pearse Doherty said that it would be “impossible to do” because of UK Government rules.

Two years ago, Sinn Fein abandoned the pursuit of lower corporation tax rates for Northern Ireland, as to do so would lead to cuts in the block grant from Westminster, hitting public services.

Yesterday, at an event organised by the Institute of International and European Affairs (IIEA), Mr Doherty referenced Dublin’s milestone shift in corporate tax policy, which will see the Republic agreeing to join the OECD framework for a global rate of 15% tax, giving up its highly prized previous rate of 12.5%.

But he said he wanted “a single 12.5% rate across the island of Ireland”.

The UK parliament approved Northern Ireland’s power to set its own corporation tax rate in 2015, but the legislation has never been used and is conditional on Northern Ireland’s financial “sustainability”.

Mr Doherty also called for a “new industrial strategy”, which he said must be “regional as well as national, harnessing and strengthening the capacity of our higher and further education colleges throughout the country, North and South”.

“A successful Derry means that there is a successful Donegal and vice versa, and we need to be mindful of that,” he told the audience.

Mr Doherty appeared to acknowledge that long-standing back-and-forth between the Northern Ireland Executive and the UK Government over the issue of the region’s corporate tax rate was unlikely to be resolved soon.

Asked whether aligning corporation tax rates on both sides of the border would be a priority after the upcoming Assembly election, Mr Doherty said that his party still favoured the move but that it appeared currently “impossible”.

“Sinn Fein favour the 12.5% rate across the island of Ireland. The issue in terms of being able to do that is that as part of the negotiations with the British Government, any benefit from reducing the corporation tax will go to the British Exchequer as opposed to the Northern Ireland Executive.

“And also, the cost of doing it initially, because you would lose some tax revenue, would also have to be borne by the Executive which means that costs have to be found in cuts to healthcare or cuts to capital expenditure or cuts in other areas.

“That makes it impossible to do. But yes, where we want to be is having a single 12.5% rate across the island of Ireland.

“This is some of the problems when part of your island is under British rule. And we don’t have those levers.”

In January 2020, Stormont Finance Minister Conor Murphy said the Executive was “not actively pursuing” a lower rate of corporation tax for Northern Ireland from the UK Government. The UK rate is 19%.

He told BBC NI that Sinn Féin had always insisted that there had to be “a very honest assessment of what a cut would cost”, as any subsequent “hit” to the Executive’s finances would affect public services. He said Stormont was “struggling just to provide the basic public services”.

“That’s not to say that others may not raise it again but it’s not something that I’m actively pursuing,” he said at the time.

Sinn Fein had previously been criticised by smaller left-wing parties for its support for cutting corporation tax. However, sections of the business community said they were left disappointed when Sinn Fein abandoned support for lowering the tax rate.