Scottish Government declines to welcome corporation tax cut

Gov: “A uniform corporation tax rate for the whole of the UK is neither desirable nor economically efficient"

by Mar 25, 2013 No Comments

Ministers have declined to welcome the cut in corporation tax to 20 per cent – despite Alex Salmond calling for the exact same reduction last year.

Instead, the Scottish Government has hinted that it wants more leeway to reduce the tax burden on businesses even further.

Chancellor George Osborne announced the cut in corporation tax from 23 to 20 per cent in his Budget last week.

But a Scottish Government spokesperson said: “A uniform corporation tax rate for the whole of the UK is neither desirable nor economically efficient. Parts of the UK such as London have an in-built competitive advantage and devolving corporation tax would provide a range of options for the Scottish Government to address this imbalance.”

However, an SNP spokesman would not explicitly say if party policy would be to cut the tax further in the future – and if so by how much.

But Patrick Harvie, leader of the Scottish Greens, has previously warned against entering into a tax-cutting “race to the bottom”.

In an interview with Holyrood earlier this year, he said: “If we carry on with this spiral of tax competition between different jurisdictions, all that will happen is this race to the bottom and the overall tax contribution that very wealthy companies make across the whole of Europe will decline.

“If that happens, yes, there is some limited economic benefit from the wages that are paid by companies, where they choose to locate their business, but that’s as nothing compared to the contribution that they should be making to the economy and society. That has to include tax. If it doesn’t, really what you’ve got, quite often, is very exploitative low-paid jobs, when the economy as a whole could be benefiting a great deal more.”

Harvie said an independent Scotland might want to introduce a lower rate of corporation tax for businesses which reinvest their profits into the community, pay a decent living wage and keep top pay under control and suggested tax breaks might be offered to companies who achieve environmental targets and trade in an ethical manner.

But he added: “This would need to be balanced with tax increases for those which outsource their labour, exploit low-waged employees, pollute the environment or invest unethically.”

Kevin O'Sullivan Kevin O'Sullivan

“Kevin has had a varied career in journalism having worked for many of Fleet Street’s finest including the Sun and the Daily Express. He completed his NCTJ in 2004 and began working for his local paper in Chatham, Kent, before moving to a national news agency. Kevin relocated to Edinburgh in 2010 and had stints with Scottish national papers as well as the Aberdeen Evening Express. He joined Holyrood magazine as Social Affairs Correspondent in September 2012 and has already becoming an avid committee watcher at the Scottish Parliament. Kevin has been slow on social media but now accepts Twitter can be used for work after previously thinking it was for moaning about the Olympics closing...

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