Wrong tax rates

Not all of your readers pore over the business section, so they may not be aware of the debate we’ve been having since June in the Op-ed column “Between the Lines” about Scottish corporation tax.

Unfortunately, Pat Rafferty of Unite plainly is someone who doesn’t, or his Platform piece (18 August) would not have added currency to the Conservative/HMRC “estimate” of a “loss” to Scotland of £2.6 billion in corporation tax.

This ridiculous number is based on last year’s tax rates, on inflating the tax base, and on debiting Scotland where it should have been credited. It thus inflates the basic cost by a third.

It also assumes no positive effect at all from the tax reduction, and includes a “fudge factor” of £0.6bn, increasing the weights of particular industries which have already been counted in the sums.

The fudge would appear to be aimed at saving the face of the Secretary of State for Scotland, whose premature press release misquoted a (flawed) UK figure as a Scottish one.

Correcting for the purely propaganda effects, the true estimate of the figure needing to be offset by increased investment is probably of the order of £1bn. That figure needs to be carefully confirmed by thorough research (See Professor John McLaren’s reaction to the consultation paper, Perspective, 18 August).

Then we can form a view as to how businesses collectively would react to halving the tax bill. If I thought it was just higher dividends, I might be with Pat Rafferty and the coalition’s knee-jerk reaction.

But if I thought there was any chance of more investment and more jobs, I’d go with the Holyrood government.

(Prof) Hervey Gibson

Cogent Strategies International

Holywood

Dumfries