Terms of Reference - Growing the Economy and Creating Jobs with Lower Corporation Tax
Growing the Economy and Creating Jobs with Lower Corporation Tax
(Preparing for the Devolution of Corporation Tax Varying Powers)
Agreed Terms of Reference
Background
1. Following the announcement by the Secretary of State for Northern Ireland in January 2015 that the Westminster Government will introduce a bill to devolve corporation tax varying powers to Northern Ireland from April 2017, it is an appropriate time for the Committee for Enterprise, Trade & Investment to consider the implications of a reduction in corporation tax on Northern Ireland business, the economy and jobs.
2. The Inquiry will be undertaken on the assumptions that corporation tax varying powers will be devolved to Northern Ireland from April 2017 and, devolution will result in corporation tax rates for trading profits being reduced considerably from current levels. The Committee is mindful that a reduction in corporation tax will impact on the Northern Ireland block grant and recognises the importance of future economic growth and job creation in mitigating these impacts. It is not the intention of the Committee to consider issues specifically relating to the rate at which corporation tax will be set following devolution or the impact of reducing corporation tax on the Northern Ireland block grant. These are issues which fall within the remit of the Committee for Finance & Personnel.
Purpose of the Inquiry
3. There is a period of two years in which the Executive can prepare for the impact of reduced corporation tax. The main focus for the Committee will be on how this time can be used to work towards maximising the potential of Northern Ireland as a region to attract investment, grow businesses and create jobs across the region. The Committee recognises that any multi-national business seeking to invest internationally will be attracted to a region with favourable taxation rates, but the Committee also recognises that other countries and regions offer low rates of taxation. The key focus for the Committee will be on the other drivers of economic growth which Northern Ireland must have in place to favourably differentiate its offer from other countries and regions. This includes providing the appropriate environment and incentives to promote and develop a balance of inward investment across Northern Ireland.
4. The outcomes of the Inquiry will help inform the Executive and help prioritise actions within a tight budget environment to maximise the potential of Northern Ireland for economic growth and job creation in an environment of reduced corporation tax.
Terms of Reference
5. The Inquiry will examine the current position in Northern Ireland as a whole as a region for investment, economic growth and job creation in the context of a reduced rate of corporation tax from 2017. It will consider the key determinants of investment currently in place both within Northern Ireland as a whole and sub-regionally. The Inquiry will identify areas for improvement and make recommendations on how these can be addressed in both the short-term and long-term to maximise the potential of Northern Ireland as a region to attract inward investment, grow its economy and create jobs.
6. Specifically, the Inquiry will:
- Identify the key determinants of inward investment and economic growth which Northern Ireland must have in place in order to attract investment, grow the economy and create jobs;
- Identify the current gaps that exist in Northern Ireland in relation to the key determinants;
- Prioritise the areas for improvement to address the gaps in provision in relation to the key determinants; and
- Make recommendations for actions to be taken in order to address the prioritised gaps in provision.
Approach to the Inquiry
7. An important focus for the Committee will be on how the key drivers for economic development are aligned to the areas which have been targeted in the Economic Strategy as having the greatest potential for economic growth. Namely:
- Telecommunications and ICT
- Life & Health Sciences
- Agrifood
- Advanced Materials
- Advanced Engineering
8. The Committee will not, however, limit the Inquiry to looking solely at these areas but will also focus the wider aspects of economic development.
9. The Committee will call for evidence from identified key stakeholders including (but not restricted to):
- Bank of Ireland, Danske Bank, First Trust Bank, Ulster Bank
- Chambers of Commerce in Northern Ireland
- Confederation of British Industry (NI)
- Deloitte, Ernst & Young, FPM, KPMG, PWC
- Department of Enterprise, Trade & Investment;
- Engineering UK
- Enterprise NI
- Federation of Small Business
- Grow NI
- Institute of Directors (NI)
- InterTradeIreland
- Invest NI
- Irish Congress of Trade Unions
- Manufacturing NI
- MATRIX Panel for Science/Industry
- Momentum
- Northern Ireland Assembly & Business Trust and its Members
- Northern Ireland Assembly Committees
- Northern Ireland Chamber of Commerce
- Northern Ireland Executive Departments
- Northern Ireland Independent Retail Trade Association
- Northern Ireland Local Government Association and 11 District Councils
- Ulster University Economic Policy Unit
- Determinants of Foreign Direct Investment; and
- Determinants of Foreign Direct Investment in European Regions.
10. The Committee and its members will undertake informal meetings, surveys and visits, as appropriate, to gain a practical understanding of the issues involved and the problems faced by key stakeholders.
11. The Committee has already commissioned Assembly Research into the following:
- Determinants of Foreign Direct Investment; and
- Determinants of Foreign Direct Investment in European Regions.
12. Assembly Research and Information Services may be asked to undertake additional appropriate research to inform the Committee.
13. Those providing written evidence to the Committee will be asked to respond by 10th March 2015. Oral evidence will be taken between 17th February 2015 and 21st April 2015. The Committee intends to report to the Assembly with findings, conclusions and recommendations by 9th June 2015.
Expected Outcomes
14. The expected key outcome of the Inquiry will be a report outlining the findings, conclusions and recommendations of the Inquiry. It is also expected that the Inquiry Report will be debated in plenary session in the Assembly.
