Scottish Mail on Sunday gives long overdue credit to First Minister? | Scottish Politics |

For once, Alex Salmond is getting some credit on his taxation proposals.


ONE of the most baffling aspects of government is the naming of things. The Department of Health, for example, should be called the Department of Illness. The Department for Work and Pensions should be the Department for Unemployment and Benefits.


HAVE AN INNER PEACE OF THAT: Or is Ruth Davidson really just a paragon of tranquil Buddhist serenity?

Some of the most misleading examples are in the taxes we pay (presided over by Her Majesty’s Revenue and Customs, when the Government Tax Collector would be more appropriate).


There is valued added tax (VAT), which is actually a retail tax, and stamp duty, which should be called house sales tax.

The tax that has been exercising politicians in Scotland, corporation tax, is also badly named.


It sounds like a tax for multinational corporations and, given the almighty rumpus there has been over some of these monster companies not paying their fair share of taxes, this has made it a very sensitive political topic.

But that is not what corporation tax is all about. It is the basic business tax. It is paid by all limited companies, however small, including one-man bands.


Clubs, societies and some charities also pay corporation tax, which means it is not the preserve of multinationals that some seem to think. Why does this matter? Because corporation tax is at the heart of the debate about whether an independent Scotland could thrive.


The SNP wants to lower corporation tax in Scotland to a level below that in the rest of the UK; the Labour Party does not.

Alex Salmond argues that if corporation tax in Scotland is three percentage points below the level of the rest of the UK, 27,000 jobs will be created and business will thrive.


Such a low level of corporation tax would attract businesses from south of the Border and encourage more companies to pay tax, rather than avoiding it.


Labour claims lower corporation tax would simply result in less tax being collected and, as a result, less money for health, education and public services.


It also points to surveys which suggest businesses in Scotland do not view cutting corporation tax as a top priority. Scottish Labour leader Johann Lamont quoted Mr Salmond’s favourite economist, Joseph Stiglitz, as saying cuts in corporation tax were nothing more than gifts for multinationals.


BUT this is where Ms Lamont and her aides have got it wrong. They seem to assume corporation tax does what it says on the tin – and it doesn’t. If corporation tax was paid only by multinationals, they might have a point. Cutting corporation tax would only provide gifts to them – but that is NOT what it is all about.


Corporation tax is paid by all sorts of small organisations and companies and cutting the rate will help them all. There is no doubt it would create more jobs.

I know of one small business in Edinburgh that has taken on its first employee simply and purely because of one small tax break in the Budget this year.


Business tax breaks work at a small, local level. If every business that pays corporation tax was allowed to keep more of its own money, many would be able to take on more employees, cutting the benefits bill and boosting the economy.


This is not about big corporations or tax avoidance, as the Labour Party seems to want to portray it as. It is about providing a tax break to business – all business.


Mr Salmond is right: cutting corporation tax would create tens of thousands of jobs.


But there is a wider issue here. This is more than just a tax spat between Labour and the SNP.


For years, the SNP has had trouble attracting 'business support' for independence – and this one policy might help reverse that trend. By advocating a cut in corporation tax, Mr Salmond is not just coming up with a business friendly policy, he is portraying independence as a viable, low-tax, pro-enterprise option.


Labour should respond with business-friendly policies of its own, not an old-fashioned, socialist-inspired, high-tax agenda only designed to catch the eye of those left wingers they have no intention of representing at a national or even local level.


Mr Salmond may be wrong on many things, but he is right on this one. Cutting corporation tax is a good idea.


The Labour Party seems to be suffering from the same affliction as the aforementioned government departments with it's name. Maybe it should be renamed the Anti-Business Party, or the High-Tax Party, or even the Public-Good, Private-Bad Party. Any of those would be more accurate than its current title.

Via Jeff Duncan, Brian Ross