SCOTLAND would have to bear any costs of devolving corporation tax, Exchequer secretary to the Treasury David Gauke has warned.
Gauke last week published figures showing that the costs of reducing Scottish corporation tax to 12.5% could be as much as £2.6bn a year. This was based on an analysis by HM Revenue & Customs, whose methods were approved by the Office for Budget Responsibility. Whatever the assumptions made in the compiling of the figures, he added, “what is certain is the magnitude of the costs that would be involved – in the order of billions of pounds”.
Writing in the Scotsman, he said that there had been criticisms that the analysis was focused on costs to the UK Exchequer and not Scotland.
However, he added: “The costs to the Exchequer are the costs to Scotland: under European law, Scotland would have to bear the costs to the UK of a reduction in corporation tax. How to cover these costs would, of course, be a decision for the Scottish Government.
“To pretend that there are no costs and that cuts in corporation tax will be self-funding – as the [Scottish National Party government] have claimed – is simply wrong,” he said.
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