Scotland politics

Scotland 'will not receive' corporation tax power

A committee of MSPs has been told that the UK government will not give Scotland powers over corporation tax.

University academic Graham Gudgin made the claim while giving evidence to the Scotland Bill committee.

He said he had "reliable information" that the tax power would not be given to Scotland "under any circumstances".

The Scotland Office responded by saying it "ruled nothing out" but that the Scottish government needed to answer key questions on corporation tax.

Dr Gudgin also told MSPs that the Scottish government appeared to be "blundering" into the debate.

The Cambridge University fellow, who is a member of the Northern Ireland Economic Reform Group, expressed worries that the Scottish administration's handling of the matter could damage Northern Ireland's bid to set its own corporation tax.

Stormont wants to reduce the tax - which is a levy paid on the profits of companies - to equal, or even below, the 12.5% rate of its island neighbour, the Republic of Ireland.

Dr Gudgin said: "If Scotland keeps pressing this, the most likely outcome is that they [UK government] will resile from this altogether, and Northern Ireland won't get it as well.

"There's quite a responsibility, I think, on the Scottish government. You could damage Northern Ireland quite a bit.

"You could also damage Scotland's long-term prospects for getting corporation tax. I don't think there are any prospects in the short term. But in the long-term, if Northern Ireland have it, the arguments are there to be made."

He continued: "If I can put this very strongly for effect, the Scottish government seems to be blundering in to this."

Dr Gudgin told the Scottish Parliament committee that he had been briefed by senior Whitehall sources that the power would not be handed to Holyrood.

The comments provoked concern among MSPs on the Scotland Bill Committee who are investigating the pros and cons of the policy, which forms a key SNP demand for inclusion in the legislation.

SNP committee member Stewart Maxwell said the comments went against the spirit of Prime Minister David Cameron's "respect agenda".

He said: "We're being told by the UK government that their minds are not made up and it's an open discussion, and there's a respect agenda for the Scottish Parliament and, in fact, for this very committee and the work it's doing.

"You seem to be suggesting in fact that their mind's already made up."

Unanswered questions

A Scotland Office spokesman said: "The UK government continues to engage with the Scottish government on potential amendments to the Scotland Bill and we have ruled nothing out at this stage.

"However, any changes to the bill must be based on detailed evidence that generates cross-party consensus.

"To date, there are more than 40 unanswered questions that the UK government has put to the Scottish government on the impact of their corporation tax proposal.

"The treasury minister with responsibility in this area wrote to the Scottish finance minister in September seeking clarity on some of these issues, but he has not received a reply.

"If the Scottish government is serious about this proposal, it needs to provide answers to the important questions."

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