Scottish independence: SNP tax vow may be slashed

Finance minister John Swinney. Picture: PA

First Minister Alex Salmond and Finance Secretary John Swinney have backed a plan to undercut the UK’s tax on profits to signal that Scotland was “open for business”.

However, some within the party are now lobbying for a re-think, claiming Deputy First Minister Nicola Sturgeon is sympathetic.

Last week, asked whether she personally supported the plan, she said that a corporation tax cut was “one of the ways” of giving Scotland a competitive edge, but that “more detail” on the party’s business case would be unveiled.

The pressure for a rethink came after Chancellor George Osborne announced that business rates in the UK would be cut to 20 per cent by 2015 – the same figure used by Mr Swinney two years ago when he sought to highlight the benefits of a lower figure for Scotland.

The focus on low tax havens has been sharpened following revelations about the tiny sums of tax paid to the UK exchequer by multi-national firms operating in the UK, such as Google and Amazon, both of which route their profits elsewhere.

Google bases its sales wing in Ireland, which has a rate of 12.5 per cent.

Google’s huge advertising sales base for Europe is based in the country. It means that the company paid just £6m of tax to the UK in 2011 on £2.6bn of profits derived in the country.

The SNP pledge has won support from entrepreneurs such as Sir Tom Hunter and the pro-independence Jim McColl.

One senior SNP source said that the party’s low corporation tax policy was no longer such a red line issue, largely because Osborne was cutting the UK rate to 20 per cent.

“It’s not such an issue for business any more,” the source said.

Another well-placed source said that the policy had been debated internally for the last 18 months. “However, the backers haven’t won over John Swinney,” the figure said.

Other figures said that a rethink could see the party ditching its offer of a headline rate cut and instead offering a “zero-rating” to specific industries, such as Dundee’s thriving computer games industry.

It is understood the SNP will now set out its own manifesto for a post-independence government which may lay out its full plans. Senior party sources last night insisted that the pledge for a headline rate and such specific “zero-rating” offers were not mutually exclusive.

One said: “Having control over corporation tax means we could look at all these things. There is still that commitment to look at the headline rate.”