The British Government has unveiled proposals to overhaul corporation tax in Northern Ireland.

The five main party leaders at Stormont and the Northern secretary Owen Paterson attended the launch of a consultation document that could lead to corporation tax in the North being substantially reduced.

This could bring about a major increase in foreign inward investment, although it may also lead to a cut in the block grant the Stormont Executive receives from the British Exchequer.

'I would encourage people and businesses throughout Northern Ireland to contribute their views to the Treasury during the consultation period,' Mr Paterson said.

The consultation period will last until the end of June although even if they are agreed by Stormont and the British Government, it could be several years before the reduced tax rates are introduced.

Deputy First Minister Martin McGuinness said it was an opportunity for local companies to benefit.

'It is not the total answer to the problem but it certainly is a major plank in helping us tackle the problems,' Mr McGuinness said.

'If we can apply all of the intelligences that we used in the course of forging the agreements we have been involved in, be it St Andrews or Hillsborough, and apply it to the next big battle, which is not a battle against each other but a battle against the recession, a battle against unemployment, a battle against poverty and disadvantage.'

Reducing corporation tax to encourage investment could make Northern Ireland less dependent on the rest of the UK, the First Minister said.

Peter Robinson welcomed today's announcement as a good news day for Northern Ireland.

'It is not in the interests of Northern Ireland to be the beggars of the UK,' said Mr Robinson. 'It is not in the interests of Northern Ireland to be dependent on the Exchequer for further new growth within our own economy.'

British Chancellor George Osborne yesterday told the House of Commons the paper considers the case for Northern Ireland's having a lower rate of corporation tax than the rest of the UK.

Companies in the North have to compete with those in the Republic, where there is a lower rate of 12.5%.