Corporation tax in NI: Chancellor to rule on devolving power
Corporation tax in NI: Chancellor says devolution 'dependent on talks'
(about 3 hours later)
The chancellor is due to announce on Wednesday if Stormont will be given the power to cut the rate of corporation tax in Northern Ireland.
The chancellor has announced that any decision on devolving corporation tax to Northern Ireland will be dependent on the outcome of the all-party talks.
In June 2013, the government said it would make its decision on devolving the tax in the Autumn Statement.
George Osborne said the power could be devolved "provided the Northern Ireland Executive can show that it is able to manage the financial implications".
He added the government would introduce in this parliament if the talks succeeded.
Corporation tax is what companies pay on their profits.
Corporation tax is what companies pay on their profits.
Supporters say it will give a major boost to the economy, sceptics say it will hit public spending with no guarantee of success.
Supporters of devolution said the move would give a major boost to the economy, but sceptics said it would hit public spending with no guarantee of success.
Even if Chancellor George Osborne gives the go-ahead, there will probably be strings attached.
Mr Osborne made the announcement in the House of Commons as part of his Autumn Statement.
Attracting investment
At the moment, corporation tax is levied at a rate of 21% in the UK, although that will be coming down to 20% in April.
At the moment, it is levied at a rate of 21% in the UK, although that will be coming down to 20% in April.
In the Republic of Ireland, the rate is just 12.5% which makes it more competitive when it comes to attracting foreign investment.
In the Republic of Ireland, the rate is just 12.5% which makes it more competitive when it comes to attracting foreign investment.
If devolution of corporation tax is agreed, a law will need to be passed at Westminster before next year's general election.
Stormont will then have to pass its own legislation, setting the rate and the precise rules, which will take up to two years.
European rules mean that any benefit Northern Ireland gets from a tax cut would have to be offset by a reduction in the amount it receives from the annual UK block grant.
That would probably mean at least £200m a year would have to be cut from public spending.
In November, the Prime Minister said the argument made by Northern Ireland politicians for devolving corporation tax was strong.
Nigel Dodds, DUP, said: "We have kept this issue to the forefront of discussions with the government.
"If we are to achieve the aim that HM Government shares with us of transforming our economy and creating jobs and wealth for our people, then we need to hear progress on this issue from the chancellor."
The Green Party in Northern Ireland has said any potential cut to the rate of corporation tax in Northern Ireland would be "unfair and ill-advised".
Assembly member Steven Agnew said: "The Green Party does not believe government should hand this power to Stormont at this present juncture, given the problems executive parties have had already managing their budgets.
"This is a huge gamble with public money and flies in the face of what should be happening in terms of raising revenue."
