Scottish Independence: Labour tax haven fears

Iain Gray. Picture: Neil Hanna
Iain Gray. Picture: Neil Hanna
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THE SNP’s plans to cut corporation tax could turn an independent Scotland into a tax haven for multinational companies like Google and Microsoft, Labour’s finance spokesman Iain Gray has claimed.

He said Scotland would lose out on jobs and investment as companies used the country to channel money and avoid tax.

John Swinney. Picture: Neil Hanna

John Swinney. Picture: Neil Hanna

But Finance Secretary John Swinney pledged that multinationals would pay their fair share in the event of a Yes vote.

The two men went head to head in a debate organised by the Federation of Small Businesses at Edinburgh’s Our Dynamic Earth. The SNP has pledged to set corporation tax 3p below the UK rate. But Mr Gray told the audience: “If you deliberately set your corporation tax, not at what you think is right, but less than the country next door to you, what you’re doing is trying to create yourself as a tax haven.”

He said Ireland was often quoted as an example of the success of such tax cuts. But he said: “Multinational companies like Google and Microsoft set up in Ireland, move their money through Ireland but don’t employ people there, they simply use it as a conduit in order to pay less tax.

“I don’t think that’s what we should be looking to build Scotland’s future on.”

Mr Swinney said cutting corporation tax would make Scotland more competitive and insisted he had already introduced anti-avoidances rule set at “the highest possible bar”.

He added: “We have got to make sure that those who’ve got tax responsibility to pay, they pay, they pay in full and they do it effectively to support our public finances.”

In answer to a question from George Sandison of Edinburgh business Brand Agility, Mr Swinney said a currency union would allow businesses in and independent Scotland to trade across borders without difficulty. But Mr Gray said Scotland already had a currency union and should vote No to keep it.

Jenny Mclay of Alba English School in the Capital said her business depended on young people from the European Union coming to study here and asked which was most likely – Scotland not being in the EU after a Yes vote or leaving after a UK referendum.

Mr Gray said he would want an independent Scotland to be in the EU, but added: “they would want to renegotiate our terms of entry”. He said some of the current opt-outs were likely to be lost.

Mr Gray said it would also be catastrophic for the UK to leave the EU and said Ed Miliband had made clear a Labour government would not have an in/out referendum on the EU.

Mr Swinney said he accepted there would have to be a negotiation about an independent Scotland’s membership of the EU, but insisted it would reflect Scotland’s involvement in the EU since 1973.