DUP to demand £460m more from Tories to cover tax cuts

THE Democratic Unionist Party is to demand tax cuts costing £460million to keep Theresa May in power after Brexit in two years’ time, The Daily Telegraph can disclose.

The party wants the money to pay for cuts in corporation tax, air passenger duty and VAT on hotels and restaurants in Northern Ireland as part of its price of continuing to prop up Mrs May’s minority Conservative government, Tory sources say.

The demand will form part of the next bill for DUP MPS’ continued support of Mrs May’s Government when their “confidence and supply” agreement is reviewed after Britain leaves the European Union in March 2019.

The news came as Nicola Sturgeon, the Scottish First Minister, threatened a formal dispute with the Government over the Tories’ £1billion deal with the DUP, as the SNP claimed David Mundell’s position as Scottish Secretary was “fast becoming untenable”. Ms Sturgeon said he had proved he was not “able or willing to fight Scotland’s corner in Cabinet” after it emerged the deal meant new funding for Northern Ireland, but nothing for Scotland.

Britain’s corporation tax of 19 per cent is already the lowest in the G7 group of nations and the Conservatives have promised to cut it to 17 per cent in 2020. However, the Government agreed in 2015 to go further in Northern Ireland and cut the tax rate there to 12.5 per cent from April 2018 – the same as the rate in the Irish Republic.

The DUP is expected to ask Philip Hammond, the Chancellor, to pay an additional £300million to the Northern Ireland Executive to cover the initial shortfall from fewer tax receipts once the cut is introduced.

The party will also demand £90 million to cover the cost of axing air passenger duty at the Province’s airports, and £70million to fund the cutting of VAT on hotels, restaurants and pubs from 20 per cent to 9 per cent, mirroring the tax regime south of the Irish land border.

Hospitality Ulster said the cut would create about 8,500 jobs.