Edinburgh at odds with coalition over tax measure

LONDON and Edinburgh were at loggerheads over powers after UK ministers claimed that cutting corporation tax in Scotland would lead to a £2 billion hole in the SNP's budget.

Alex Salmond has called on the coalition government to hand him the power to set the key business rate, and has pledged to reduce it in order to attract businesses north of the Border.

But Treasury figures yesterday showed that, if the tax was reduced to Irish levels of 12.5 per cent, more than 2bn in tax revenues would be lost.

The figures were hotly disputed by the SNP which claimed that cutting corporation tax would attract more businesses to Scotland, and thereby increase the tax take.

The release of the figures comes with a consultation on devolving corporation tax to Northern Ireland expected within days.

Scotland Secretary Michael Moore said: "These new figures from the Treasury raise some serious questions for the Scottish Government. The removal of more than 2bn from the Scottish Budget is a big drop and would require some tough choices. It is not clear what the impact on Scottish public services would be."