Business tax options to be outlined


purse Scotland

A potential tax regime to "support" businesses after a Yes vote in the referendum will be outlined by the Scottish Government in an economic analysis paper this week.

Finance Secretary John Swinney said he will set out the "opportunities" ahead, just days before the publication of the SNP administration's formal blueprint for independence.

The economic report is expected to focus on a "distinct approach" to corporation tax, capital allowances, national insurance and access to finance.

"This week's report will provide a detailed analysis of Scotland's economic position and the range of economic policies that any future government of an independent Scotland could use to create a stronger and more prosperous Scotland," Mr Swinney said.
"There can be no doubt that while Scotland is performing well within our limited powers we are lagging behind other comparable countries on key measures including productivity and labour market outcomes. Closing this gap would mean more jobs, higher income levels and an opportunity to tackle inequality in our society.

"Using the tools of independence we can target policies to Scottish circumstances instead of having to deal with a misguided one-size-fits-all approach from Westminster governments that doesn't suit Scotland's needs.

"We want to create the most supportive business environment we can to help create long-term, secure growth with greater job opportunities and more prosperous businesses."

First Minister Alex Salmond will unveil the report with Mr Swinney.

It aims to show that Scotland is a wealthy and productive country with relatively strong performance compared to the UK.

It will claim that the key powers to transform the economy lie at Westminster, with activity concentrated in London and the south-east of England.

An extract of the report states: "Scotland's business structure differs from the rest of the UK. The design of a one-size-fits-all tax system for the UK in terms of its support and incentives for start-ups and business growth may not always be optimal.

"Moreover, many of the challenges that Scotland faces, for example in diversifying the economy and encouraging business development, have been dealt with more successfully in other countries. This suggests that there is scope for more local policies and priorities to lead to better outcomes.

"Independence would provide the government of an independent Scotland with significantly enhanced powers to boost the competitiveness of its business base and rebalance the structure and composition of the economy. The government of an independent Scotland may choose to use these additional economic levers in a number of ways."

It raises options including a "distinct approach" towards targeting corporation tax and capital allowances to encourage private sector growth and investment, particularly in small to medium enterprises.

New policies on business taxation, specifically tax rate allowances and the simplification of the current tax compliance system, could also be looked at.

National insurance reliefs could be used to support employment and recruit staff, the report suggests.

A spokesman for Better Together, the campaign aiming to keep Scotland in the UK, said: " It is welcome that the nationalists recognise how successful Scotland is as part of the UK. The position of the SNP seems to be that Scotland is great and it's all Westminster's fault.

"As their own internal analysis showed, every penny raised in Scotland, including oil money, is spent on public services, pensions and benefits in Scotland.

"If they are going to start offering White Paper wishlists, they must say what taxes they would put up or what services or benefits they would cut in order to pay for it.

"We have the best of both worlds in Scotland. We have a Scottish Parliament making decisions on areas that matter and we have a home market of 60 million people for our businesses. Why on earth would you trade that for Alex Salmond's independence gamble?"

A UK Government spokesman said: "We are the most prosperous part of the UK outside London and the South East. Scotland has performed just as strongly or better than similar sized independent countries by being part of the UK.

"The coalition Government is delivering economic opportunity across Scotland and the UK, for example by reducing our corporation tax rate to the lowest in the G20 and creating one of the most competitive business environments in the world.

"The Scottish Government claims to want to cut business tax but fails to explain how their proposals would be funded. They cannot keep dodging basic questions about the economics of independence.

"In private they admit an independent Scotland would face a huge black hole in its finances but do not tell people and businesses in Scotland which taxes would rise or which spending would be cut to fill this gap. As we saw this week, neither do they have a coherent explanation of which currency an independent Scotland would use.

"If this is what's to come in the long-awaited White Paper then Scotland deserves better."

© 2013 Press Association