Corporation tax cut 'could generate 58,000 top jobs' in Northern Ireland
A CUT in corporation tax will create 58,000 extra jobs in Northern Ireland by 2030, according to a new report commissioned by the Department for Employment and Learning.
The document, Preparing For A Lower Corporation Tax Environment, by Oxford Economics, says that a reduction in the rate from 24% to 12.5% would create double the jobs that would otherwise be produced locally, as well as £6bn in extra wages and profits for the economy as a whole.
With the current tax rate, employment growth over the next two decades is forecast to be 57,000 jobs, a quarter of the rate of employment growth during the pre-recession decade.
The Treasury is currently mulling a proposal to allow Northern Ireland the power to set its own tax rates.
The new research looked at best practice internationally - including the economies of the Republic of Ireland, Singapore, South Korea, Estonia, Poland and the Czech Republic - and found that skills will be critical in realising full benefits of a lower corporate tax regime.
The report also found that with a reduction in the corporation tax rate, employment in the software and ICT sector could double in size by 2030 and there would be a 70% increase in STEM (Science, technology, engineering and maths) professionals compared to today.
Over half of the 58,000 jobs would still be created by indigenous firms, both directly and indirectly, according to the document and with a cut in the rate of corporation tax, the employment rate is forecast to rise from 67% to 71% by 2030.
However, the report said that with Northern Ireland having around 370,000 of working age not in employment and 127,000 economically inactive with no qualifications, there would be a "huge challenge for employability".
Without a decrease in the tax rate, there would be a 100,000 increase in the workforce for those with level four, or foundation degree qualifications and above, and a 100,000 decrease in the workforce with no qualifications by 2030.
Employment and Learning Minister Stephen Farry said that the up-skilling of the workforce needed to happen as soon as possible to prepare for the benefits that a lower corporation tax rate could bring.
He said that without a decrease "the outlook for the economy is difficult" and that Northern Ireland would continue to flatline and stagnate compared to other regions.
"We have a long tail of underachievement and other economies do not have that to the same extent," he said.
"We need to do more to provide opportunities, we need to invest in ways to up-skill our people. Even in the most basic of jobs there are requirements for numeracy and literacy.
"We need to be able to create as many jobs as possible.
"If we overshoot, that is not as bad as undershooting. Skills can be transferable.
"Looking at the experience of other economies, the report has pointed out that we need to keep investing in the education system and research and development because we don't want to be behind the game when things pick up."
He also pointed to his department's Assured Skills programme which is working alongside firms like BT, Axiom and Heritage Fund Management to train young people in industry-specific skills.
Responding to the report, CBI Northern Ireland director Nigel Smyth said that it is sensible that the department is planning ahead.
"The availability of the right skills will be a key determinant of the success of having a lower corporation tax rate," he said.
"According to this latest report, we can expect almost half of the additional jobs to be delivered by Foreign Direct Investment and over 10,000 by the expansion of local firms.
"While there will be additional job opportunities across all levels of qualifications it is clear that the greatest opportunities will be with individuals with higher qualifications and skills.
"Decisions on devolving and reducing lower corporation tax rate over the summer will provide an important boost to business confidence, and will help to deliver much needed job opportunities for unemployed people in Northern Ireland."
12.5%. The corporation tax rate politicians would like. It is currently 24%