David Cameron gives no commitment on devolving coporation tax powers until after Scottish referendum

PRIME Minister David Cameron has ruled out any devolultion of corporation tax powers to the Northern Ireland Executive until after the Scottish referendum.

The Scots go to the polls on Septmber 18, 2014 to vote on in the referendum on independence.

And on Tuesday afternoon, Mr Cameron told the First and deputy first minister at a meeting his 10 Downing Street office that he will not make any decision before referendum.

It is a blow to Peter Robinson and Martin McGuinness who had hoped to bring good new on corporation tax devolution to the Northern Ireland Executive.

However, the Prime Minister wouldd not give any commitment on devolving corporation tax powers until the Scottish independence referendum was out of the way in 17 months time.

Instead, Mr Cameron is expected to focus the talks on the forthcoming G8 summit in Co Fermanagh in June.

Last week, Chancellor George Osborne announced a 1 per cent cut in corporation tax to 20 per cent from 2015 to help attract inward investors.

Stormont wants power over corporation tax so that it can reduce it to match the rate in the Republic of Ireland.

The policy has all-party support at the executive and the backing of the secretary of state.

But the idea is not universally supported in government at Westminster.

There are fears there that devolution of such a key tax could prove difficult and expensive to manage and be a drain on both Treasury coffers and Stormont’s annual finances.

In order to comply with European law, the executive would have to compensate the Treasury for any tax reduction by handing back a portion of its annual budget, costing hundreds of millions of pounds a year.

However, supporters believe the economic boost to Northern Ireland from inward investment would outweigh the cost to the public purse.

But there are also concerns that the issue could ignite nationalist passions in Scotland ahead of the independence referendum next year.

Those with reservations about devolving the power may also point to the downward trajectory of the main UK rate – falling 8% during the lifetime of this parliament – and could argue that the rate difference between Northern Ireland and the Republic is reducing in any event.

Earlier this month, Northern Ireland Secretary Theresa Villiers said the meeting would help Mr Cameron come to a decision.