Speaking before the debate, Alliance Finance Spokesperson, Dr Stephen Farry MLA, has challenged the Executive to provide a comprehensive rebuttal to the Varney I Report, and to demonstrate how they are continuing the fight for a differential rate of corporation tax for Northern Ireland.
Dr Stephen Farry MLA said:
“It’s a matter of real concern that the Executive has not launched a major rebuttal of the Varney Report. We have seen no ministerial statement to the Assembly in the three months since its release by the Treasury. It has fallen to the business sector to continue the fight, and to the Alliance Party to facilitate a debate in the Assembly.
“A differential rate of corporation tax is only the means to an end, but it is an important means, and one where the Republic of Ireland has a competitive advantage over Northern Ireland. This advantage means that the Republic of Ireland continues to take the lion’s share of foreign direct investment coming to this island.
“The end should be the creation of a sustainable Northern Ireland. This means a lower financial dependency on the Treasury, a much larger private sector share of GDP, and a higher rate of productivity. The Executive supports all of these on paper, but Northern Ireland lacks the fiscal tools to facilitate the necessary step-change in the economy. The Varney I report does provide a considerable bank of helpful analysis, but it was deficient in a number of areas.
“First, there is little regard given to the considerable regional disparities in the UK economy as a whole, with nine out of twelve regions dependent on fiscal transfers.
“Second, there is little consideration of a reality of an all-island economy. This is a different concept than simply making comparisons between separate economies in two distinct jurisdictions.
“Finally, and most alarmingly, the report does not envision any meaningful productivity convergence between the Northern Ireland and the rest of the UK. The report argues that Northern Ireland can continue to receive its share from the success of the UK economy, through the Barnett Formula. This will mean that the Executive will be denied the instruments they need to deliver essential changes, and Northern Ireland will be seen by the Treasury as little more than a trumped-up county council. This will create a crisis of political expectations. The current Varney II review seems too narrow to produce a meaningful difference.”
ENDS