In a detailed response to HM Treasury’s consultation on the devolution of corporation tax TUV have argued that the status quo should remain as the proposed changes could have disastrous consequences for Northern Ireland – both politically and economically.
 
Commenting party leader Jim Allister said:
 
“As noted in our response the First Minister of Wales, Carwyn Jones, is on record as saying that devolving tax-varying powers to Cardiff would be “disastrous” as he feels that the region is already underfunded. The same point could be made about Northern Ireland as any cut to corporation tax in Northern Ireland will have to be offset by a cut to the block grant. According to HM Treasury figures this would amount to a cut of £110 million, £235 million, £265 million, £265 million and £270 million in each of the first five years in which there was a 1.5% reduction in the rate of corporation tax in Northern Ireland. Our own Department of Finance and Personnel has estimated that the direct cost to the block grant could be in excess of £400 million by year five.
 
“Simply put a cut in corporation tax has very certain costs for Northern Ireland and very uncertain gains. As a Price Waterhouse Cooper report observed survey evidence shows that the level of corporate taxation and labour costs appear to be of less importance than other non-tax factors. On the other side of the coin Northern Ireland will have to bare the cost of a cut to its block grant meaning less money for our schools and hospitals at a time when they are already having to deal with significant fiscal pressures.
 
“Additionally a unified taxation system across the UK is necessary in order to maintain the Union. Moves to devolve these powers represent another fundamental assault   on   Northern   Ireland’s   place   within   the   UK.   TUV   believes   that   Northern Ireland’s economic future is best served by being more closely linked to one of the world’s largest economies, not tied more closely to the bankrupt Republic of Ireland.”
 
Among the other points made in the TUV response are:
• The potential of Northern Ireland to benefit from UK wide measures – including a cut to corporation tax – without having to suffer the pain of a cut to the block grant;
• The devolution of the tax will bring significant volatility to the Northern Ireland budget;
• Northern Ireland will have to bear the extra costs of policing the new regime and
• Different levels of corporation tax will increase the administrative burden on GB companies which do business in Northern Ireland.

You can read the TUV response in full here.