Lib Dem's Stephen backs corporation tax cut call

BACKING for cutting corporation tax rates in Scotland has been given by the Scottish Liberal Democrat leader, Nicol Stephen. Such a move, however, depended on the current Northern Irish campaign to cut tax being successful, he said.

Stephen's comments, which included a wish to raise the Scottish annual economic growth rate to above 3 per cent, came at an election hustings meeting in Edinburgh organised by the Federation of Small Businesses Scotland (FSB).

His remarks on a tax issue which is normally the preserve of the Scottish National Party caused surprise among the audience of 300 business people at the Sheraton Hotel on Thursday evening to quiz the four main party leaders.

Lowering corporation tax has been a major plank of SNP policy, but government officials have always insisted that any cut in the rate in Northern Ireland, if agreed, would only be on the special circumstances pertaining there and would not be a carte blanche for introducing differential rates of corporation tax across the UK.

Speaking to The Scotsman afterwards, he said that the commission set up by the Liberal Democrats to look into how devolution might be strengthened, chaired by Lord David Steel, a former Scottish parliament presiding officer, had recommended the devolution of more powers, including taxation powers, to Scotland.

"One of the taxes they suggested where there could be greater devolution was corporation tax," he said. Stephen said that there was a strong campaign in Northern Ireland supported by regional businesses and politicians for corporation tax in Ulster, presently 30 per cent as in the rest of Britain, to be cut so the province could compete more effectively with the 12.5 per cent rate in the Irish Republic.

"If that was to be granted, I think there would be unstoppable momentum to devolve a similar degree of responsibility to Scotland and that could really benefit Scottish businesses," he said.

Stephen told the meeting: "With more powers [for the Scottish parliament] we could do more to up the growth rate from 2.3 per cent now to over 3 per cent."

But Alex Salmond, the SNP leader, said he believed independence was essential to deliver growth. He said that Scotland's growth over the past ten years had averaged 2 per cent, in Britain it had been 2.4 per cent, but in other small European countries, the average had been 4 per cent.

Annabel Goldie, the Scottish Conservative leader, disagreed. She said: "I think the Union has got a proven track record of providing stability and benefits for all Scottish businesses. I don't think the case is proven for independence."

Jack McConnell, First Minister and the Scottish Labour leader, desisted from attacking independence. He concentrated instead on promoting Labour's plans to boost education.

He argued that his plans for skills academies across Scotland would provide youngsters with the skills they and employers needed for Scotland to compete in the future. "I think that policy is one of the most significant we have put forward in this campaign," he said.

All the party leaders said they had accepted the FSB argument for lowering business rates bills for small businesses, with the SNP and the Conservatives saying they had done more than was asked.

Goldie claimed that the Conservative plan, which would cost 150 million, was the only one which was fully costed and funded by savings elsewhere.

The meeting grew lively when complaints were levelled about Gordon Brown's pension fund raids and the Budget increase in corporation tax for small businesses. McConnell's response that pensions tax policy was not an issue in the campaign drew boos from the audience.

But Salmond drew applause when he said the Chancellor had given with one hand and taken away with two hands.

A BRIDGE TOLL TOO FAR?

THE meeting got heated when business people from Fife complained about Labour and Liberal Democrat plans to keep the 1 Forth Bridge toll for vehicles carrying one person, but to abolish it for vehicles with two or more people.

David Chalmers, FSB Fife, argued that small businesses would be severely penalised as they could not carry an extra person in a delivery vehicle and neither could they use public transport for deliveries.

Annabel Goldie said it was an absurd outcome of coalition politics caused by Labour having to accept a Lib Dem demand to abolish the Skye Bridge tolls. Alex Salmond said it was ludicrous to abolish tolls in the west of Scotland, but keep them in the east. But Jack McConnell insisted it was sensible to keep the toll as the bridge now had a limited life.

He feared that abolishing all tolls would increase traffic and force the bridge's closure before a second crossing was in place.

Nicol Stephen said that 60-70 per cent of vehicles crossing the bridge had a single occupant. "I don't think there are many businesses that will suffer from a 1 toll," he said to shouts of "rubbish".