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Deal may revive Scots demand over levy

Irish deal paves way for corporation tax powers

Peter RobinsonA historic agreement over Northern Ireland’s  budget and historic crimes will see the devolution of corporation tax powers to the province.

The transfer of the tax was predicted ahead of the Autumn Statement and confirmed by Chancellor George Osborne on condition that a deal between the power-sharing parties was reached.

It was finalised today after months of tense talks that risked the collapse of the coalition of nationalists and loyalists set up in 1998 as part of the peace deal.

Northern Ireland First Minister Peter Robinson said the agreement would lead to a “brighter future” and pave the way for Northern Ireland to acquire devolved powers to set its own corporation tax rate. It offers the Stormont Assembly the chance to set a more competitive rate nearer the 12.5% of the Irish Republic rather than the 21% now shared with the rest of Britain.

Transferring corporation tax powers to Northern Ireland is likely to reignite demands for it to be switched from Westminster to Scotland. The SNP wanted the tax to be included in the powers considered by the Smith Commission.

However, critics point to the differences between Scotland and Northern Ireland. The latter has few indigenous industries while Scotland’s economy is dominated by energy and finance which they see as an integral part of the UK economy and less easy to disentangle.

There was concern among the business community that devolving corporation tax to Holyrood would lead to a a “race to the bottom” as Edinburgh and London played tit-for-tat to maintain an edge.

The breakthrough in Belfast came after lengthy talks between Sinn Fein, the Democratic Unionist Party and representatives of the governments of Britain and Ireland.

The Northern Irish government will get extra cash and borrowing powers of £2 billion which will involve some cutbacks in departments and staff.

“It has been a challenging and, at times, difficult process for all concerned,” said Irish Foreign Minister Charlie Flanagan.

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