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UK — Reducing Northern Ireland corporation tax could create 90,000 jobs

17 February 2010

The Northern Ireland Economic Reform Group (ergNI) of senior economists, accountants and business interests has launched a report on reduced corporation tax for Northern Ireland. The report argues that reducing corporation tax from the current UK-wide rate of 28% to the 12.5% levied on firms south of the border in the Republic of Ireland would be the best way to revitalise Northern Ireland and could create more than 90,000 extra jobs in the next two decades.

Northern Ireland remains the UK's poorest region. It has the lowest average wages and among the lowest productivity. Despite having proportionately the smallest private sector, it has suffered the largest percentage loss of jobs of any region during the current recession. Its unemployment rate has risen to the third highest of any region, and a higher percentage of its working age population are inactive than in any other region.

Around half of all government expenditure in NI is financed by British tax-payers, and in reality tax-payers in South East England. The subsidy to NI is worth in the order of 9 billion Pounds every year. This means 5,000 Pounds for every person living in NI, or 20,000 Pounds a year for a couple with two children.

The authors point out that all of this has happened despite the highest levels of government support for business in any UK region. Most large businesses in manufacturing and agriculture, and many service businesses with export potential, receive generous grants or subsidies.

The European Union plans to begin reducing from next year the ceilings for the maximum amount of grant that 'Invest Northern Ireland' is allowed to give private firms. If these plans are realised, it is possible that no investment grants may be permitted at all after 2013.

To read the full report please click here



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