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Corporation tax cut could cost more than £2.6 billion

Michael Moore tells SFE conference provisional figures show cost of cutting corporation tax to Irish levels

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government


Provisional figures from HMRC show that if the Scottish Government were to cut Corporation Tax to the same level as Ireland there could be a gap of more than £2.6bn in the Scottish Budget.  David Gauke, the Exchequer Secretary to the Treasury announced these provisional figures to the House of Commons during the Report Stage of the Scotland Bill on Tuesday 21 June.

Scottish Secretary Michael Moore also quoted these figures as he addressed Scottish Financial Enterprise in Edinburgh and called on business to “be part of a better, more mature debate on Scotland’s economic and constitutional future”.

The Scottish Government wants to devolve and cut corporation tax. The UK Government remains opposed to the idea but has agreed to  consider a further submission from the Scottish Government. Devolving Corporation Tax was previously considered and rejected by the independent Calman Commission.

Michael Moore said:

“These provisional figures from the HMRC raise some serious questions for the Scottish Government. The possible removal of more than £2.6bn from the Scottish Budget is a big drop and would require some tough choices to be made.  Would they make the necessary budget cuts or would they look to raise the money from other sources such as Scottish Income tax? We could be faced with the scenario of Scottish families paying hundreds of pounds more each year in order to plug the gap.

“Let me be clear. I am not denying the right of the Scottish Government and the Scottish people to debate these issues. But what I do take issue with is the way in which that debate is being conducted. And that is for two main reasons. The first is that it is having the effect of distracting our focus in Scotland from what should be our top priority - rebuilding our economy. The constitutional debate cannot be at the expense of our immediate focus on creating the environment in which Scottish businesses can prosper.

“And the second reason is that the current debate is simply too heavily founded in rhetoric, and not enough in hard facts. The Prime Minister has made clear that he will make the positive, optimistic case for Scotland’s place in the United Kingdom. As a proud Scot, I am happy to join him in making that case.  I am absolutely clear that Scotland’s interests, and Scotland’s future, are best protected by a devolved Scottish Government working within the framework of the United Kingdom.

“The UK Government will happily put forward further evidence in support of the case for Scotland remaining part of the United Kingdom as and when the opportunity arises. But this is not just a debate for politicians. It must involve Scots from all walks of life. So today, I invite you to be part of a better, more mature debate on Scotland’s economic and constitutional future. A debate that is founded on evidence and carefully considered positions. That debate must include your voice - the voice of Scotland’s financial services community - and the voice of people from all other walks of life.”

Published 23 June 2011