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Northern Ireland Chartered Accountants Support Corporate Tax Cut

by Philip Morton, Investors

21 November 2007

A recent survey of almost 500 chartered accountants in business, industry and the public sector in Northern Ireland has provided overwhelming support for a cut in corporation tax.

The Financial Confidence survey, undertaken by the Ulster Society of Chartered Accountants (USCA), (a district society of the Institute of Chartered Accountants in Ireland (ICAI)) in association with the Economic Research Institute of Northern Ireland (ERINI), highlights that a cut in corporation tax is viewed by members as the key fiscal measure needed to assist private sector growth in Northern Ireland.

In its recent response to the Varney Review of Tax Policy in Northern Ireland, ICAI, representing the profession across Ireland, has already urged Varney to "recommend that Northern Ireland be granted a differential corporation tax rate from the rest of the United Kingdom", and further suggests that the rate should be aligned to the 12.5% rate in the Republic of Ireland.

ICAI also states that in its view, there are no technical or legal grounds as to why such a rate could not be applied to Northern Ireland, or that amendments to the Taxes Act could not be made to accommodate such a change.

In addition to lower corporation tax rates, members believe that key government policy priorities to grow the economy over the next decade should include improvements in skills and education, with better alignment of the education system and the commercial environment, improvements in local infrastructure, and the promotion and encouragement of enterprise.

In fact, there is significant support for current Government Regional Economic Strategy policy priorities focusing on infrastructure, skills, enterprise and innovation.

However, the survey showed that there are areas for concern. While continued political stability is viewed as having the most important impact on business performance, significant concerns exist over both the availability and cost of labour in Northern Ireland.

Other issues of importance include increased competition from both local and international rivals, customer pressure for improved products and services, the rising costs of energy and raw materials, and tax and regulatory pressures.

Finance professionals involved with export businesses also highlight concerns in relation to downward pressure on prices.

Angela Reavey, Chairman of the USCA, which represents 2,800 chartered accountants in Northern Ireland, observed that:

"The high level of participation from our members in this survey is a strong indicator of their willingness to play a role in shaping economic development in Northern Ireland, as well as a powerful gauge of the level of support for a Corporation Tax rate cut within the local business sector."

She continued: "The Financial Confidence survey also highlights the need for a focus on skills, education and availability of labour if Northern Ireland is to take advantage of the historic opportunity of capitalising on international goodwill to push towards a globally competitive economy. Our Society is especially pleased to be working with ERINI on this survey, and for ERINI's expertise and analysis in helping to undertake this major project. It is a project that we will repeat on a regular basis to establish key trends in opinion throughout out membership."

Victor Hewitt, Director of ERINI concluded:

"This survey adds to the already overwhelming body of evidence in support of a differential corporation tax that has been given to the Varney Review team. For the sake of Northern Ireland's future, Sir David must find the courage to address this issue regardless of the opposition of the Treasury".

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