Devolve corporation tax to Scottish Parliament, says think tank

Powers to vary corporation tax rates should be devolved to the Scottish Parliament, a think tank has said

Holyrood ministers could lower the levy paid by businesses in attempt to broaden the tax base, the Reform Scotland think tank said.

Despite the fact Scotland has higher top rates of tax than the rest of the UK, the burden rests more on those at the bottom because the nation has fewer wealthier earners, the report’s authors found.

Whereas almost £1 in every £3 raised in the rest of the UK is from the highest earners, less than £1 in every £6 comes from Scotland’s richest.

Among its recommendations, the think tank said the Scottish Government could offer a zero rate of corporation tax for new businesses setting up in the country - including for a set period after they begin to earn profits.

The authors added that such a policy could have no cost because it would apply only to newly created enterprises. Those businesses will contribute in other ways to public revenue, particularly through employment.

A spokesman for the Scottish Government said it believed all tax powers should be the responsibility of the Scottish Parliament “so fiscal decisions that affect the people of Scotland can be made here”.

They added: “It’s important developments are balanced and evidence-based, taking into account the opportunities and challenges presented by each tax.”

“Our decisions on taxation have resulted in a more progressive tax system, protecting lower and middle income taxpayers and introducing the Starter Rate of tax, while raising additional revenue to invest in our public services and the Scottish economy.

“Under our progressive approach, 55 per cent of Scottish income tax payers pay less income tax than people living in the rest of the UK.”