NI corporation tax rate 'driving business south'

The main corporation tax rate in NI is more than twice that in the Republic

A government department has admitted that lower corporation tax may have been a factor for companies investing in the Republic rather than NI.

In the past five years, 21 companies were in talks with Invest NI, the body responsible for attracting investment, but subsequently went south.

The Department of Enterprise, Trade and Investment said infrastructure and skills may also have been issues.

It said that Northern Ireland remained an attractive investment prospect.

The figures came to light following a written Assembly question to the minister responsible, Arlene Foster, from Sinn Fein MLA Paul Butler.

In her answer, the minister said that normally Invest NI would attempt to establish why a company had decided not to proceed with investing in Northern Ireland.

She said that this was not always possible, sometimes due to commercial sensitivities.

However she added that corporation tax may be a factor as well as infrastructure and the availability of both property and skills.

All the main political parties in Northern Ireland have been pushing for a reduced corporation tax rate, arguing that the current rate of 28% drives potential investors south of the border, where the main rate is just 12.5%.

That view has been backed by an independent think tank, the Economic Reform Group, which said that a reduction was the only policy change which could lift Northern Ireland out of its economic rut.

As part of their coalition agreement, the Liberal Democrats and Conservatives said they would produce a paper "examining potential mechanisms for changing the corporation tax rate in Northern Ireland".

In 2007, a review commissioned by the last government and led by Sir David Varney said that any reduction in the rate would have a short-term impact on revenue which would not be outweighed by long-term benefits.