Corporation tax: Declan Kearney warns NI executive may not be able to afford cut

A senior Sinn Féin member has warned that the NI Executive may be unable to afford a cut in corporation tax.

Declan Kearney, the party's national chairperson, made the comments in a newspaper article.

It would cost an estimated £300m a year to cut the tax rate from its current 20% to 12.5%.

Mr Kearney said that under current austerity plans that would not be affordable.

The DUP's Peter Weir said Mr Kearney's comments and others recently by other Sinn Féin members "expose their naivety on economics".

"The only reason there is dust being thrown in the air regarding corporation tax is because Sinn Féin decisions, through southern influences, have landed us with a black hole in the budget," he said.

"Sinn Féin can spin and try to distract from the facts, but their best way forward would be just to implement what they agreed in the Stormont House Agreement."

'Economic tsunami'

Mr Kearney's article states that the executive's block grant from Westminster fell by £1.5bn in real terms in the last parliament.

It adds that it will fall by a further £800m by 2018 under the current Conservative spending plans.

Mr Kearney states: "The local private and public sectors are already too weak to withstand such a virtual economic tsunami.

"One direct consequence of the ongoing austerity crisis is that, in these circumstances, the regional economy will not be able to afford the introduction of corporation tax even if a date and rate were to be agreed."

The legislation to allow corporation tax powers to be devolved to Stormont was published in January

The block grant would fall if the tax is cut because it would mean less revenue is collected for the Treasury, and under European rules Stormont would have to make up the shortfall.

The legislation to allow Corporation Tax powers to be devolved to Stormont was published in January.

However, it includes a 'commencement clause' which means the power will not be devolved until the Treasury assesses that the executive's finances are on a sound footing.

The Northern Ireland parties had agreed a deal on Westminster's welfare reform measures in the Stormont House Agreement last December.

However, Sinn Féin withdrew its support in March.

The current UK rate is 20% whereas in the Republic of Ireland firms pay 12.5%.