Variations in corporation tax - Kirsty Williams comment

3.44.24pm UTC (GMT +0000) Tue 14th Nov 2006

Welsh Liberal Democrat Enterprise, Innovation and Networks spokesperson, Kirsty Williams, has expressed her concern that plans to cut corporation tax in Northern Ireland could have a serious impact on the Welsh economy.

The plans would bring rates in Northern Ireland down to the level of the Irish Republic, less than half the UK rate.

Ms Williams said: "It is not yet clear whether these plans would breach competition rules. If Northern Ireland is able to lower its rates, however, I would be extremely concerned about the possibility of Wales, and in particular the Objective One area, being left behind.

"I have asked the Enterprise Minister to provide details of conversations he has had with the Treasury, and with his colleagues in Northern Ireland, about varying corporation tax. It is important that the Welsh Assembly Government is at least thinking about the implications of these plans, and their impact on the Welsh economy. I would think there was a strong case, if these plans were allowed in Northern Ireland, to consider a similar lowering of corporation tax for Objective One areas in Wales."

Notes:

· A paper published by the Economic Research Institute and backed by Sir George Quigley, head of the Northern Ireland civil service, calls for companies there to be exempt from corporation tax on the first 60 per cent of profits. This would effectively mean businesses were paying a 12 per cent rate, just lower than the Irish Republic's 12.5 per cent rate. The UK rate is 30 per cent.

· EU member states set their own tax rates, but it has been suggested that the plans for Northern Ireland are in breach of state aid rules, which restrict the amount countries can provide subsidy to companies in particular regions. The Azores is the only region in the EU to have a special corporate tax rate and in July the commission ruled that this was in breech of competition rules.

· Ms Williams has submitted questions to the EIN Minister, asking what discussions he has had on this issue with the Treasury and with his colleagues in Northern Ireland.