Belfast Telegraph article 15 June - "There is a risk here"

Contributing to the Belfast Telegraph's week long review of Corporation Tax, BDM Tax Director, Brendan Morris writes:-

It is one of the cornerstones of a democracy that taxes can only be raised with the consent of the people. Thus, politicians have a responsibility to make sure that people understand the implications of changes to their tax system.

Cutting corporation tax (CT) will leave a shortfall in our region’s finances. Of course, the plan is that this will be made up by increased inward investment. But there is a risk here, and people must be made aware of it. For all its attractions, a cut in the CT rate is not an automatic one-way bet.

Some will see a CT cut as a tax break for big business at a time when most households across the UK are seeing their taxes rise. There is a persuasive counter-argument to this in terms of the increased economic activity and employment a rate cut should bring, but politicians and business alike will need to keep explaining this.

The tax paid by a company on its profits is the product of the tax rate applied to its taxable profits. All discussion has been about reducing that rate. However, what if Northern Ireland had power to adjust that taxable profits figure for local companies? To give incentives for particular local actions, or additional deductions for activities we need? Perhaps politicians need to consider wider powers than just cutting the rate, though if they do there will be a complexity burden to bear in mind for companies operating beyond Northern Ireland into the rest of the UK.