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Scottish government makes corporation tax case Scottish government makes corporation tax case
(about 1 hour later)
The Scottish government has set out its proposals for Holyrood to win control of corporation tax from Westminster.The Scottish government has set out its proposals for Holyrood to win control of corporation tax from Westminster.
Finance secretary John Swinney said cutting the headline rate would encourage business growth and boost economic recovery.Finance secretary John Swinney said cutting the headline rate would encourage business growth and boost economic recovery.
Critics of the move said it could leave ministers short of money to pay for public services.Critics of the move said it could leave ministers short of money to pay for public services.
Excluding north sea oil, corporation tax generated £2.6bn in revenue for Scotland in the year to 2010.Excluding north sea oil, corporation tax generated £2.6bn in revenue for Scotland in the year to 2010.
Setting out the Scottish government's case, Mr Swinney argued that using new powers to cut the business tax and encourage business research would leave more profit for investment, making Scotland a more attractive place for businesses to locate.Setting out the Scottish government's case, Mr Swinney argued that using new powers to cut the business tax and encourage business research would leave more profit for investment, making Scotland a more attractive place for businesses to locate.
The UK Treasury is considering devolving control of corporation tax to Northern Ireland, given its unique position in sharing a land border with the Republic of Ireland - where the levy is set at 12.5%.The UK Treasury is considering devolving control of corporation tax to Northern Ireland, given its unique position in sharing a land border with the Republic of Ireland - where the levy is set at 12.5%.
The Scottish government wants the same powers included in the Scotland Bill, currently going through Westminster.The Scottish government wants the same powers included in the Scotland Bill, currently going through Westminster.
Mr Swinney said separate analysis showed if Northern Ireland was able to pre-announce a cut in the corporation tax rate to 12.5%, 58,000 more jobs would be created, while living standards and economic growth would rise.Mr Swinney said separate analysis showed if Northern Ireland was able to pre-announce a cut in the corporation tax rate to 12.5%, 58,000 more jobs would be created, while living standards and economic growth would rise.
"Scotland needs full control of the key economic levers to meet the specific challenges facing the Scottish economy - and the cross-party Scotland Bill Committee in the last parliament concluded that this power should be available to the Scottish government if it is granted to Northern Ireland," he said."Scotland needs full control of the key economic levers to meet the specific challenges facing the Scottish economy - and the cross-party Scotland Bill Committee in the last parliament concluded that this power should be available to the Scottish government if it is granted to Northern Ireland," he said.
"Lower corporation tax is a vital source of competitive advantage in an integrated global economy, helping to attract new businesses and highly-skilled jobs."Lower corporation tax is a vital source of competitive advantage in an integrated global economy, helping to attract new businesses and highly-skilled jobs.
"A competitive corporation tax regime has been a feature of the economic success of many countries, and we want Scotland to have the same opportunities to bring in jobs and boost growth.""A competitive corporation tax regime has been a feature of the economic success of many countries, and we want Scotland to have the same opportunities to bring in jobs and boost growth."
'Cart before horse'
Mr Swinney has been backed by some businesses leaders, including Jim McColl.Mr Swinney has been backed by some businesses leaders, including Jim McColl.
But the Institute of Chartered Accountants in Scotland said that changes to the rate of corporation tax - the main rate currently stands at 26% - could leave the government short of money to fund public services.But the Institute of Chartered Accountants in Scotland said that changes to the rate of corporation tax - the main rate currently stands at 26% - could leave the government short of money to fund public services.
In addition, it could start a tit-for-tat war over corporation tax rates with the other home nations.In addition, it could start a tit-for-tat war over corporation tax rates with the other home nations.
Labour finance spokesman Richard Baker said the Scottish government had failed to answer key questions in its case.
"Today's paper puts the cart before the horse," he said, adding: "It argues Scotland should sign up for a change in corporation tax responsibility before stating what detailed changes the SNP would make.
"They also fail to supply any detailed evidence of how this will actually benefit Scotland's economy.
"What rate would corporation tax be set at? What would make up any shortfall? How would you stop firms from leading economic activity elsewhere in the UK but declaring profits in Scotland? There are lots of arguments in the paper but no detailed answers."