Tax doubt ‘is harming investment’
A LEADING accountancy firm has claimed that uncertainty over Scotland’s tax situation is already damaging investment in the country.
Speaking after John Swinney’s claim that personal taxes would not rise after independence, accountants Saffery Champness said the finance secretary’s attempt to reassure voters that income tax and national insurance would remain stable was “too weak” a message to prevent investors being deterred from injecting cash north of the Border.
The prospect of independence, the SNP’s plans for to create a Scottish tax-collecting body Revenue Scotland and new powers already included in the Scotland Act 2012 to vary income tax were factors creating uncertainty, said Ronnie Ludwig, a tax expert in Saffery Champness’s Edinburgh office.
Whether or not Scotland votes for independence, 2016 will see the Scotland Act 2012 come into force. The legislation will reduce the rate of income tax in Scotland by 10 per cent in each band, allowing the Scottish Parliament to raise it as much, or as little, as it wishes.
Mr Ludwig said: “The Scotland Act 2012 grants Scotland the right to set its own rates of income tax, to be administered by HMRC from 2016.
“No-one knows what these will be, which has created uncertainty, not just here but throughout the world. Scotland will be able to create new taxes and devolve additional taxes, but again we have no idea what these are likely to be, which is harming the Scottish economy now as businesses are unlikely to come to Scotland or invest in Scotland until there is a degree of certainty.”
Mr Ludwig raised the question of how an independent Scotland would deal with the tax agreements the UK has with other countries which govern how much tax should be paid by a resident in one country but with an income from another.
He said the UK has 117 formal double tax agreements worldwide and negotiating new ones “would be an enormous and risky undertaking”.
A Scottish Government spokeswoman said: “The wider claims are wrong and are not supported by the facts, which show that international businesses are continuing to invest heavily in Scotland, with the latest report on foreign direct investment from Ernst and Young that showing Scotland is – for the second year in a row – the top performing location in the UK for securing inward investment jobs.”
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