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Lower tax rate no threat

November 16, 2011

By Staff Reporter

The border in Ireland has never seemed less relevant, at least in certain areas of economic activity.

The entire island is marketed as a single entity these days when it comes to tourism, and for some years now – though most lately not in the case of the A5 road in Tyrone and Derry – the Dublin government has been contributing to the costs of roads north of the border.

There are still obvious economic differences of course, not least the fact that the two jurisdictions use a different currency.

And while the island might present itself as one place to the global tourism industry, the fact of two currencies does result in the somewhat curious situation in which a visitor from the Republic to the North technically qualifies as a tourist, and vice versa.

The Republic and North also apply different levels of corporate taxation, a far lower rate applying south of the border than north of it. The Republic, to the chagrin of a number of other EU countries and the U.S., levies at the rock bottom rate of 12.5 percent.

The North is currently tied to the British rate of 26 percent, but its locally elected politicians have been lobbying London in an effort to lower the rate for the six counties that they represent at Stormont.

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If they are successful, this could mean a rate as low as 10 percent and the North being in a significantly stronger position when it comes to attracting investment from overseas corporations.

North first minister Peter Robinson has been leading the charge for the lower rate, and he has the support of deputy first minister Martin McGuinness.

Robinson, speaking recently in Dublin, said he was confident that a reduction in the North’s corporate tax levy would not lead to cross border tensions.

Robinson said that the Irish government had actually been in favor of the Stormont Executive’s push to achieve the 10 percent rate.

“The government here has been fairly supportive of us having the power of setting corporation tax in Northern Ireland and the level decided by the Northern Ireland Executive,” Robinson told the Chartered Accountants Leinster Society in Dublin.

He stressed that strengthening relations across the border was important as it would benefit both economies.

“The economic difficulties which you have been experiencing in the Republic of Ireland have also impacted the Northern Ireland economy,” said Robinson.

“The Republic is one of our key markets for exports and tourism, and it is in our interests, as neighbors and trading partners, to strengthen those economies, recognizing what works and taking a pragmatic approach to guide us through these difficult economic times,” he said.

 

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