NI corporation tax consultation paper to be published

Corporation tax is at 28% in the UK but only 12.5% in the Republic of Ireland

Secretary of State, Owen Paterson has said a cut in the rate of corporation tax in NI would help many businesses here.

A consultation paper outlining ideas from both the British government and the NI executive will be published on Thursday.

Corporation tax is at 28% in the UK, but only 12.5% in the Republic of Ireland.

The consultation will close at the end of June.

Campaigners argue that bringing the tax into line with the Republic could help invigorate the NI economy.

Although the UK rate is expected to fall to 24% by 2014, it would still be significantly above the 12.5% rate in the Republic.

Later today, the treasury will publish its views on views on whether or not Northern Ireland should be able to set its own rate which would allow it to compete more effectively with the south for inward investment.

It is expected the Treasury will point out that any cut in local corporation tax would have to be financed by a subsequent reduction in the block grant from London.

Speaking ahead of the announcement, Secretary of State, Owen Paterson said he had "listened" to many businesses in NI.

"They are absolutely convinced it would help them," he said.

"It wouldn't just bring in new investment, it would really radically help some of the very high class businesses we've already got."

Mr Paterson said NI's over dependence on public spending had to be rebalanced - although he said it could take as long as 25 years to achieve this.

The Economic Advisory group - a think tank set up to advise the executive - said that its research showed that while a cut in corporation tax could boost employment - the precise benefits of a reduction remained unclear.

Last week the BBC Politics Show revealed it had been told by senior treasury sources that the London government was "minded to grant Northern Ireland its wish".

The Irish government is under pressure to raise its level of corporation tax so any cut to the current level of corporation tax in NI may not go as low as 12.5%.