Tuesday, April 05, 2005
< The report on the SNP's policy of cutting corporation tax to kick-start economic growth (Mon front-page & Tues. 29th) by > Professor Midwinter is misinformed.
The case that all the SNP's policies, specifically independence & the concomitant use of oil revenues, could cost 10 billion is arguable either way. However it is unreasonable to use this figure in an argument about cutting corporation tax < & rates >. As he states later since our total corporation tax receipts are 2.1 billion a cut of 1/3rd would be 700 million. Scottish Enterprise already costs us 500 million, for less obvious effect & Holyrood has regularly had an underspend of 500 million. This is therefore clearly affordable.
The argument over whether independence <, requiring the SNP to win both a Parliamentary & referendum majority, is feasible > is a different issue. < As has happened in Quebec,> it is quite possible the SNP could become the leading party < in government > without persuading the electorate to secede.
The Professor is also in error in saying that Ireland's growth preceded the tax cut. Ireland decided on reform in 1989, including cutting business taxes & instituted it within a year. They immediately came out of stagflation. It is true that in face of this success they repeatedly cut corporation tax < further > to it's present level of 12.5% (& that the rate of growth further increased), which is what he is referring to in saying that some tax cuts came after success, but the initial cut came first - the relationship between reform & success is so close that it is not reasonable to deny that the one led to the other. Independence & EU membership, < which are > sometimes credited with responsibility for Ireland's achievement, both came decades earlier & immigration (actually the return of generations of emmigrants), not surprisingly, followed growth.
A point he misses is that the lesson the SNP have learnt from Ireland is twofold. Not just cutting business taxes but also cutting regulation. < It is understandable but unfortunate that Holyrood has made it's presence felt more by increasing regulation than by cutting it. The former is easy for government to do while the latter requires considerable self examination, but for the sake of the nation our MSPs must do it.>
Turning round our economy cannot be done purely by writing a cheque but it can be done by a government willing to make the effort, which includes writing that cheque & backing it. Since each per cent increase in growth means a continuing extra billion of national wealth each & every year the gains to be made exceed the cost many times over. < I may be accused of naivety but > I do not believe < that, with this visible example,> the Scots electorate are either to stupid or to shortsighted to understand this.