Our viewpoint

Stimulating the Scottish economy

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The survey results provide an interesting steer to the Scottish Government as to how it might use corporate tax rates to successfully stimulate Scotland’s economy.

Its findings strongly suggest it is not significantly, but sustainably, lower rates that would stimulate investment. Simplifying the regime would also be welcome and likely to lead to inward investment.

The results suggest the policy objective of increasing investment is more achievable than initially imagined. This is because results show there is no need to compete with Irish corporate tax rates (12.5% – 11.5% lower than the UK rate). Instead, sustainably lower rates are key.

For businesses making long-term investment decisions, this means years, if not decades, of lower rates in comparison to the rest of the UK and internationally. For businesses to build this into their decision-making, the Scottish Government will need a really strong reputation for economic credibility. This also places pressure on it to effectively implement the tax collecting powers it already holds under the Scotland Act.