AN INDEPENDENT Scotland would have one of the lowest corporate tax rates in the Western world in a bid to attract multinational firms, Alex Salmond has promised.
An SNP government would undercut whatever level the UK set by 3 per cent, the First Minister pledged yesterday – a move which would result in a coporation tax rate of 17 per cent after 2015 under current forecasts.
As claims and counter-claims over the viability of independence intensified, former chancellor and Better Together leader Alistair Darling warned that Westminster could block a business tax cut if Scotland were locked into a currency union with London after a Yes vote.
But speaking as he launched a document setting out the economic case for independence, Mr Salmond insisted the Bank of England would have no veto over tax levels, and pledged to slash tax on business profits.
Mr Salmond and Deputy First Minister Nicola Sturgeon launched the document yesterday, saying Scotland could “more than afford” to stand alone if voters choose to leave the UK in next year’s referendum.
The SNP leader also stepped up the brinkmanship with Westminster over his threat to walk away from Scotland’s £90 billion share of UK national debt, if the nation is not allowed to keep the pound.
The Yes campaign has faced awkward questions in recent weeks over currency, as well as claims this week from the UK Treasury that mortgages and insurance premiums could soar after independence.
But these were branded scare stories by Mr Salmond, which will “shrivel up in the sun”. The 16 months until voting will be a “marathon not a sprint”, he added.
The paper – Scotland’s Economy: the case for independence – which was launched in Falkirk yesterday, claims that rising inequality under Westminster, and consistent economic mismanagement by successive UK governments are costing jobs and depressing growth.
The Scottish Government’s plans to keep the pound would see the Bank of England remain Scotland’s central bank, meaning it could limit Scotland’s borrowing and debt levels.
The First Minister confirmed cutting corporation tax will be a key plank of Scotland’s drive for growth after independence. “That is our policy, yes,” he said.
The UK level of corporation tax is set to fall from 24 to 21 per cent next year, before dropping to 20 per cent in 2015.
If Scotland’s rate falls to 17 per cent, it would also undercut Luxembourg’s 21 per cent rate, where the likes of Amazon and eBay base some of their operations.
It would also put Scotland way below Germany at 29 per cent and France at 33 per cent.
However, the rate would still be higher than in Ireland, where companies are charged 12.5 per cent. This has helped it attract computing giants like Dell and Microsoft, allowing Irish export levels to soar to more than €130bn – compared with £24bn in Scotland.
Responding to Mr Darling’s claims that such a move would be impossible if Scotland were part of a sterling zone as the SNP has promised, Mr Salmond said: “There’s no reason why you shouldn’t do that – you would have control of your fiscal levers.”
However, Mr Salmond’s claims were hotly disputed by Mr Darling who said: “Alex Salmond will claim that he can do everything under the sun if Scotland were independent, but not if you’re in a currency union, you can’t. You can see what’s happening in the eurozone just now. Your tax, your spend, your borrowing, that’s all regulated.
“There’s no way that the rest of the UK would let Scotland undercut it on corporation tax or any other tax for that matter – it just wouldn’t happen.”
Business leaders have welcomed the promise of a lower tax rate. David Watt, of the Institute of Directors in Scotland, said: “It is an economic advantage in attracting things like headquartered companies. They actually pay their tax in your country if it’s a lower rate.”
CBI Scotland’s assistant director, David Lonsdale, added: “If corporation tax were to be determined by Holyrood then of course we would prefer tax rates to go down rather than up. However, recent actions suggest that the tax rate could well be increased rather than cut.”
He pointed to the recent introduction of a £95 million supermarket levy and a tax hike on empty business properties.
“Recent tax rises are hardly reassuring,” he added.
Mr Salmond again insisted that the sterling currency would be among the “assets” to be divided up after independence, allowing Scotland to keep using it as part of a currency union.
“Sterling is our currency as well as the rest of the UK’s currency, just as the Bank of England is our central bank as well as the rest of the UK’s central bank,” he said. “What you can’t have is an assumption that one country would have all of the assets but not expect, therefore, to take all of the liabilities.”
The First Minister has indicated Scotland could walk away from its share of the UK’s national debt. He said yesterday: “It’s not a debt default, that’s a statement of fact – that assets and liabilities have to equitably shared. All assets, all liabilities.
“You can’t pick and choose. You can’t choose one side of the balance sheet and not the other.”
But Chief Secretary to the Treasury, Danny Alexander, warned the UK would not have to enter a currency union, and a recent Treasury analysis indicated it is unlikely such an arrangement would work.
He said: “A vote to leave the UK is a vote to leave its institutions, like the Bank of England, and to leave the pound.”
The Scottish Government paper focused on the country’s potential for growth as an independent nation. Mr Salmond said Scotland had generated more tax per head than the rest of the UK for every one of the past 30 years.
He also highlighted Scotland’s strength in industries other than oil and banking, which have been the focus of much of the debate ahead of the referendum, such as tourism, food and drink, as well as life sciences and the creative industries.
Six key policy differences between north and south
THE Scottish Government has highlighted six Westminster policies which it would change post independence.
• The decision of the last two Westminster governments to cut capital spending which would have supported an additional 19,000 jobs in Scotland. The Scottish Government would increase spending under independence.
• The UK government’s failure to make the most of Scotland’s oil and gas resources. It has pledged to establish a Norwegian-style oil fund after independence.
• The decision by the UK government to engage in a boom in credit and debt expansion, damaging the economy. The SNP wants to rebalance the economy with ambitious targets to deliver a 50 per cent increase in exports by 2017 and says the creation of the Scottish Investment Bank will help new firms emerge.
• It says Westminster has allowed income inequality to grow dramatically in the UK, to the point where the UK is now the fourth most unequal society in the developed world. Alex Salmond has set out ambitious plans to get more women back into the workplace with a shift towards European levels of childcare, where up to 80 per cent of costs are funded by the state.
• The decision to concentrate economic activity in London. The SNP believes that not just Scotland but other areas of England have suffered from this and resulted in a “long- term growth gap.”
• The decision to pursue austerity rather than focus on growing the economy. The SNP says that, while both Labour and the Tories backed a programme of cuts, Alex Salmond called for more spending on building schemes as an “engine of economic growth”.