The debate moves onto one of my specialist areas!
The
Scottish Government's case (sic) is actually a major discussion document which the other political parties ignore at their peril.
The "case" actually makes no case other than 'give us the control', whilst I would actually like to see some type of substance, or even possible some sort of expression of a principle for how, where and why Corporation Tax would be raised in Scotland.
Is it A Good Idea? Well only if it is being used for a good reason and for beneficial principles. And that is where the 'case' falls down.
The implication from the document - it's not a promise, or a plan, or an ambition, or even an expectation - is that Corporation Tax in Scotland would fall from 28% to 12.5% to match Ireland.
It will undoubtedly attract businesses, but whether we want to attract the tax-rate tarts of international commerce is another matter. How quickly the companies left Scottish (and Irish) Enterprise Zones to Slovakia when the Slovaks dropped the tax rate shows how much of a market there is in transient exploitative companies.
The paper makes many good, coherent points, but bypasses the downsides, and throws other things into the mix.
Corporate tax revenues will increase as a result of the tax cut
True, but only because partnerships and sole traders will incorporate to cut their overall tax bill.
Companies won't create 'brass plate' operations
Bollocks. Check out how ineffective HMRC have been against Vodafone (legally!!) 'profit shifting' and think about the £4bn the Treasury have lost.
At the same time, it could make the country more attractive as a location for multi-national investment. It could also act as an important signal to global companies and investors as to Scotland’s ambition to be a location for competitive business (p32)
Nonsense
. They will go to Switzerland if they have Intellectual Property (0% tax). They'll go to the Cayman Islands if they are offshore financing companies (4/5%). Ireland for R&D (10%). Or to Guernsey if they are CalMac, where they can avoid NIC.
If the Scottish Government are serious, really f'ing serious about tax reform, then they need to bring CalMac employees back onshore as a matter of urgency.
Alternatively, a new organisation could be set up to administer the collection of corporation tax receipts in Scotland. (p48)
Oh dear God no! Dismantle HMRC and set up "Scottish Revenue". Undertrained numpties in a call centre in Auchterbrechin telling you that they you are doing it wrong.
Seriously; at the moment a major element of tax evasion checking is comparing VAT returns to Tax returns and finding unregistered traders. Won't happen with a separate system. Tax loss.
Today a new client came to me after the taxman matched fishing crew share income against tax returns. Is a new Scottish tax office to be set up for this and the other intelligence issues? It is going to be hugely expensive to set-up these databases and maintain them; far less investigate them.
...
Probably the biggest argument against the change is Warren Buffet saying that tax rates never changed his investment decisions.
Reductions in Corporation Tax will benefit me personally greatly for tax planning reasons that must remain private. Most of my client will pay much more in Corporation Tax but even less in Income Tax, by changing their income structures and by diverting income.
But all we are doing is driving down corporate tax rates whilst PAYE tax payers continue to pay the same rates, and rates that will have to increase to compensate for the loss. That shifts the tax burden from the rich to the poor.
I know. It's my job. I do it for clients every day. And I have set up clients for bigger savings if these plans go through. Like ti or not, my profession will be exploiting this at every opportunity.