Official Report search · Parliament Workbench

Chamber

Meeting of the Parliament 15 September 2011

15 Sep 2011 · S4 · Meeting of the Parliament

Item of business

Scotland Bill (Corporation Tax)

Baker, Richard Lab North East Scotland Watch on SPTV

Such ambitions could be achieved if the Scottish Government used the powers that it has on, for example, business rates. It could be counterproductive to change the headline rate of corporation tax, thereby opening up avenues to the risks that Patrick Harvie talked about. I ask for a different approach, although I acknowledge the issues that he rightly raised. There is a real danger of companies engaging in a brass-plating exercise and simply robbing other parts of the UK of corporation tax income without attracting jobs or creating extra growth in Scotland.

The evidence to support the Scottish Government’s contention that the measure would boost growth is, at best, hotly contested and weak—and that is before we consider the important issue of how the measure would be paid for. The Scottish Government contests the HM Revenue and Customs figure of £2.6 billion. That is a dispute for the Government to have with HMRC, but whether we are talking about half that figure or just hundreds of millions of pounds, the question is how the money will be found in the Scottish Government’s budget, particularly given all the Government’s commitments in a range of areas, including its commitments on higher education funding and freezing council tax for five years. If cutting public expenditure to provide for a corporation tax cut means losing thousands more public sector jobs in a gamble to create more private sector jobs, on the basis of flimsy evidence, then we should not take it.

The motion refers to Northern Ireland. The issue is hotly contested there, where it has been estimated that the proposal will cost £400 million. Trade unionists there do not support the move.

Over the summer, John Swinney presented a cut in corporation tax as a cure for our economic ills, but today he has left Mr Ewing to make the case for the Scottish Government. I am sure that Mr Ewing will make the case for tax cuts unfettered by the constraints of a social-democratic analysis with gusto on this occasion.

Today, the SNP has managed to put itself to the right even of the Scottish Conservatives in arguing for business tax cuts and cuts in public spending. I do not imagine that that will cause Mr Ewing much discomfort, but I cannot believe that all SNP members will be quite so comfortable with that, because the plans are not a magic bullet—in fact, they represent voodoo economics. It is impossible to sustain Scandinavian levels of social investment with a Reaganomic approach to taxation. The SNP would have us believe of this proposal and of its plans for independence that it is possible, but its sums do not add up. That is why we will oppose the Government motion today.

I move amendment S4M-00856.4, to leave out from “recognises” to end and insert:

“believes that proposals by the Scottish Government for new powers to be included in the Scotland Bill must be backed by evidence that their devolution will benefit the Scottish economy; believes that, in its case for corporation tax, the Scottish Government has failed to provide the required evidence that such a move will be affordable or beneficial to the economy; notes that neither CBI Scotland nor the STUC support this proposal, and recognises that the broader issues of tax competition within the UK are complex and challenging and that no decision has yet been made on the devolution of corporation tax to Northern Ireland.”

15:46

Search Hansard contributions

Meeting of the Parliament 15 September 2011

In the same item of business