Reform Scotland Urges PM To Be 'Truly Radical'

Corporation tax transfer would make Conservative devolution plans transformational.

Reform Scotland, the independent, non-party think-tank, has challenged the Prime Minister to consider going further than his Party's Strathclyde Commission report on enhanced devolution. As he makes his first visit to Scotland after the release of the Commission report, Reform Scotland has called on him to consider the so-called benefits of 'true radicalism.'

The Scottish Conservative proposals for enhanced devolution, as recommended by the Strathclyde Commission, include the devolution of Income Tax and Air Passenger Duty, suggesting that - if implemented - the proposals would mean the Scottish Parliament would raise 38% of what it spends.  It also recommended assigning revenues from VAT which could take this level to over 50%.

The Devo Plus proposition was for all taxes to be fully devolved to Holyrood, with the exception of National Insurance and VAT. If Devo Plus were to be implemented, Holyrood would raise 74% of its own expenditure.

Whilst the Strathclyde Commission has been welcomed by Reform Scotland as a significant step forward, the think tank believes the addition of Corporation Tax to the basket of devolved taxes would make the proposals truly game changing.

Reform Scotland has also pointed to the unintended consequences of Corporation tax not being devolved – with some companies taxed through Income Tax, set by Holyrood, and some through Corporation Tax. The overall policy intention in recent years has been to harmonise the starting rate of Income tax with the starting rate of Corporation tax, failure to devolve Corporation Tax means that harmonisation would be unlikely.

Reform Scotland's Chairman Ben Thomson said:

"The final report from the Strathclyde Commission was very encouraging, but could be even bolder. We welcome the plans to devolve Income Tax in its entirety, but the plans could and should have gone further.

"The missing link between the Conservatives and true radicalism on enhanced devolution is the failure to recommend devolving Corporation Tax.

"It has always been our view that decisions should be taken at the most local level possible and, in that spirit, there is no reason why the Scottish Parliament should not be empowered to set Corporation Tax rates as well as Income Tax rates, ensuring a properly structured tax system for Scotland’s companies."

Reform Scotland advocated the devolution of Corporation Tax in its Devolution Plus proposal, later promoted by the cross party Devo Plus Group. The think tank believes since the UK Government is investigating devolving Corporation Tax to Northern Ireland, there is no reason it could not be devolved to Scotland.

Ben Thomson continued:

"Corporation Tax devolution would enable Holyrood to raise another 7% of its own spending and would be another significant step towards proper financial accountability for the Scottish Parliament.

"Setting Corporation Tax rates would be a game changer for accountability and would inspire quality debate in Holyrood about how best to raise funds and grow the economy.

"With company taxation devolved to state level in the USA, and the UK Government investigating devolving it to Northern Ireland, this is an unmissable opportunity for the Prime Minister to be truly radical and cement his localist credentials."

The Scottish Government says only a vote for independence will give Scotland control over its finances.

Finance Secretary John Swinney will deliver a major speech on the country's finances in Dundee today.