Extend corporation tax devolution to Scotland, says SNP

3 Dec 14
George Osborne’s Autumn Statement support for the principle of devolving corporation tax to Northern Ireland brought immediate demands from the Scottish National Party for similar powers in Scotland.

By Keith Aitken in Edinburgh | 3 December 2014

George Osborne’s Autumn Statement support for the principle of devolving corporation tax to Northern Ireland brought immediate demands from the Scottish National Party for similar powers in Scotland – an option ruled out last week by the Smith Commission on further Scottish devolution.

Finance Secretary and Deputy First Minister John Swinney said a Holyrood committee under Labour convenorship had taken the view four years ago that any corporation tax power given to Belfast should also go to the other devolved administrations.

‘I thought that was a reasonable argument back in 2010 when it was put forward and I think it’s a reasonable argument now,’ Swinney told the BBC. 

There was, he added, ‘absolutely no good reason’ why Scotland should not have the power to adjust corporation tax in the interests of growing its economy.

Though First Minister Nicola Sturgeon this week supported the principle of Northern Ireland gaining the power, the issue has threatened to sour relations between the two devolved jurisdictions.

Northern Irish leaders have long insisted that they need the opportunity of countering the Republic of Ireland’s low-tax offer to international mobile investors, an argument Osborne now says he accepts provided the assembly in Belfast can manage the new power. But Scottish Ministers worry that it would put their own inward investment efforts at a disadvantage.

Swinney welcomed Osborne’s easing of the tax burden on North Sea investment, in the wake of the recent dramatic fall in oil prices, but said that it merely repaired some of the damage caused by the  Chancellor’s £2bn ‘tax grab’ on the industry in his 2011 Budget.

Chief Secretary Danny Alexander will set out details in Aberdeen tomorrow of the new fiscal regime, which includes an immediate cut from 32% to 30% in the supplementary tax charge on the industry’s profits and other investment incentives.

The oil tax changes met one dissenting voice – from the Scottish Greens. Co-convener Patrick Harvie said: ‘Despite the clear opportunities which exist for green investment to create quality jobs, cut household fuel bills and reduce carbon emissions, we again see Westminster politicians pouring money into roadbuilding and falling over themselves to offer tax breaks to wealthy oil firms whose profits we already subsidise by a billion pounds a year.’

Several of Osborne’s announcements appeared to respond to recent developments in Scotland, not least his promise of a ‘powerhouse' for the north of England and his reform of stamp duty.

The stamp duty reform follows the Scottish Government’s replacement Land and Buildings Transaction Tax (LBTT), announced in October, and Swinney remarked today that ‘imitation is the sincerest form of flattery.”

But the LBTT has been criticised by some for penalising middle class house buyers in the £300,000-400,000 range.

‘The fact that the SNP has chosen to punish those aspiring to own a family home is now even more apparent,’ Scottish Conservative finance spokesman Gavin Brown said.

‘The SNP seriously needs to reconsider its assault on aspiration, and reducing the tax burden on families instead of increasing it.’

The UK Government believes that Osborne’s reform, which applies in Scotland until the new tax kicks in next year, would benefit 98% of Scottish house buyers.

 

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