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Independent Scotland to cut corporation tax?

So here’s one that will rattle the cages of all those “Better Together” supporters: an independent Scotland could become a major tax haven for multinationals.

Ne proposals put forward by John Swinney, Scotland’s Finance Secretary, include slashing corporation tax in the North if this month’s referendum goes towards independence. This has of course created a massive row between Mr Swinney and MSP Labour leader Iain Gray, who is decidedly against breaking off from the UK. The two faced off at a debate recently, and the sparks absolutely flew.

Mr Gray was adamant that slashing corporation tax would do nothing that would actually help the country, as multinationals might use an independent Scotland as a tax haven but not much else. Meanwhile Mr Swinney insisted that reducing taxes would bring Scotland into line with the more competitive countries out there and also foster economic growth – and that there was also a GAAR in place with the new Tax Powers Bill anyway, so quit whinging. Well not his exact words, but you know that’s what he was thinking.

So will Scotland become the next Luxembourg or Jersey if it goes independent? Will British contractors have to suddenly worry if their accounts are held in Scottish banks that they’ll be targeted under some new iteration of IR35? Right now of course there’s no way of actually knowing this for certain, as it’s not exactly something you can predict. On the one hand, this could be used as an argument against independence by claiming that the unknown is just too risky and that it’s better to err on the side of caution; on the other, the possibility of Scotland becoming a tax haven could just be the “Better Together” crowd grasping at whatever straws they can find in order to manipulate voters on an emotional level.

Honestly if you must know I don’t think it’s going to be a problem either way. I’ll tell you why: in the event that the referendum fails in creating an independent Scotland, there’s obviously nothing to worry about besides some rather salty Scotsmen – and let’s be honest here, no one’s going to notice that as out of the ordinary. Meanwhile if the referendum passes, with the Tax Powers Bill in place I’m betting it will suitably limit tax avoidance. So why worry?

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