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Govt to propose devolution of Northern Ireland corporation tax powers

Chancellor George Osborne will back the devolution of corporation tax powers to Northern Ireland in tomorrow’s Autumn Statement, the Financial Times reports.

The move would allow the country to compete with the Republic of Ireland’s low tax environment, where the rate of corporation tax is set at 12.5 per cent compared with the UK’s 21 per cent.

However, Liberal Democrat Treasury chief secretary Danny Alexander has reportedly warned devolving powers over corporation tax to Northern Ireland would lead to similar demands from the Scottish National Party, which has already expressed a desire for the same autonomy north of the border.

The Smith Commission last week proposed handing Scotland powers over setting income tax rates and bands.

However, Scottish first minister Nicola Sturgeon said the proposals would still mean 70 per cent of taxes and 85 per cent of welfare north of the border are decided by Westminster.

Separately, the Financial Times also reports Osborne will announce he has fallen short of his 2010 target of eliminating the national deficit by 2014/15 by some £50bn, or 3 per cent of national income.

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