Pass over of tax powers to Northern Ireland delayed
Talks to decide on whether Northern Ireland should be granted the power to set its own rate of corporation tax have ended without agreement.
Key ministers from the UK and Northern Ireland are continuing with meetings in Belfast to discuss potential ways to encourage economic growth Northern Ireland and increase the size of the private sector.
The ministers, including Treasury secretary David Gauke, secretary of state for Northern Ireland Owen Paterson and Northern Ireland's finance minister Sammy Wilson agreed that further discussions were needed before a decision could be made.
It is the third meeting of ministers to discuss the proposal, and would enable Northern Ireland to cut its corporation tax rate from the UK rate of 24 per cent to 12.5 per cent - in line with that of the Irish Republic.
Northern Ireland faces stiff competition for foreign investment from the Republic of Ireland, which has one of the lowest corporation tax rates in Europe.
David Gauke said that although the meeting was 'productive' there remained 'crucial areas where significant differences of opinion still exist.'
"I recognise that many people are keen to see a decision on the devolution of Corporation Tax in Northern Ireland, but it is important that any decision is informed by a full understanding of the implications of such a step," he said.
Meanwhile, Owen Paterson said: "We've made substantial progress, particularly on setting out the potential shape of a devolved corporation tax regime without disproportionate burdens on either businesses or HM Revenue & Customs. But there remain big questions around the potential costs to the block grant. These must be resolved before a final decision can be made."
Under European Union rules, any cut in corporation tax in the country would have to be accompanied by a reduction in the amount it receives from the central Government in Westminster. According to the Financial Times, the Treasury estimates the cost of a tax cut to the block grant could reach £500m, however local ministers dispute this figure.
Northern Ireland's chairman of the Confederation of British Industry, Ian Coulter, called the delay in a decision 'disappointing.'
"It is essential that officials focus their efforts on resolving outstanding issues with the aim of creating a position where a decision can be made in early September by the Coalition Government," he said.
The MPs are due to meet again in September.