Business Debates Scottish Tax Powers

by Jason Gorringe, Tax-News.com, London

04 June 2010

The Director of Confederation of British Industry (CBI) Scotland, Iain McMillan, has been criticized by a group of Scottish business leaders over his opposition to the Scottish Parliament having full tax-raising powers.

A group of influential Scottish businessmen have opposed the CBI’s views and attacked McMillan’s concerns that a new tax system would increase the administrative burden on businesses north of the border.

Jim McColl, head of engineering group Clyde Blowers, remarked that the CBI was not speaking on behalf of the majority of Scottish businesses. McColl backs the move for the Scottish Parliament to have autonomous tax-raising powers and, according to the Scotsman newspaper, he said: “We're very much benefits-dependent at the moment. We've got our hand out to take some money and then we've got to work out how we spend it. That's like many of the people who are on benefits in Scotland. It's not that we want to be like that. I think we're better than that".

McMillan expressed surprise at the attack by McColl and commented: “Fiscal autonomy means that the UK’s unitary tax system would become fragmented and businesses’ compliance costs would increase as a result." He went on to add that “Scotland’s tax income would in future need to cover all our expenditure, which currently it does not. The interest on our share of the UK’s national debt, including the extra debt incurred in supporting two of Scotland’s major banks, would need to be funded and the debt reduced over time. The current wider pooling of these costs and risks across the UK would end.”

The new Scottish Secretary Michael Moore has stated that he intends to look at giving the Scottish Parliament tax-raising powers beyond those recommended by the Calman Commission. The Commission recommended that ministers in the Scottish Parliament be given the power to raise income taxes.

A business group has been set up to press for the Scottish Parliament to have full fiscal autonomy. Reform Scotland is backed by Jim McColl, Martin Gilbert (head of Aberdeen Asset Management) and Dan Macdonald (Chief Executive of Macdonald Estates). The Chairman of the group, Ben Thomson said: “We're launching the campaign for fiscal responsibility today to act as a focal point to try and bring people together, in as wide a church as possible, who believe in the philosophy that most of our taxes should be devolved to Scotland to allow it to raise the money we spend."

Thomson, a wealthy backer of the Scottish Nationalist Party (SNP) and friend of SNP leader Alex Salmond, has said that Salmond is willing to forgo full independence for now to see in a regime where the Scottish Parliament has full fiscal autonomy.

Organizations as diverse as the Scottish TUC, the Kirk (the Church of Scotland) and the Institute of Directors have combined to press for Scotland to have its own tax-raising powers.

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