THE SCOTTISH GOVERNMENT has proposed a new tax-collecting agency to administer a separate corporation tax north of the border.
The Scottish National Party (SNP) administration released its discussion paper on a devolved corporation tax for Scotland. It said that a separate corporation tax would “give Scotland a powerful new policy lever to promote growth and support jobs”.
The SNP suggests that HMRC could carry out the collection of tax. The document quotes a regulatory impact assessment for the Scotland Bill that estimates that devolving parts of income tax to Scotland would incur £45m in one-off costs and ongoing costs of £4.2m a year.
However, it also suggests that a new organisation could be set up to administer the collection of corporation tax receipts. This would immediately save £28m that Scotland currently pays HM Revenue & Customs for administering corporation tax, it says. “One of the primary aims of this would be to make the Scottish collection system less administratively burdensome than the current UK system,” the document states.
The Scottish government cites the example of Finland, where there is one tax administrator for every 903 people compared with one to every 695 in the UK, as evidence of small countries that are able to administer their tax systems effectively.
“The Scottish Government would fully consider all the relevant issues, options and costs before deciding on which of the two options outlined offers greatest value for money to Scottish taxpayers. We will look to refine cost estimates and will involve experts in helping us to robustly examine the options and costs,” the document states.
Any decision would have to minimise the burdens on taxpayers, simplify the tax system and ensure that businesses are not put at a competitive disadvantage, it adds.
The UK government has previously ruled out the possibility of a separate corporation tax and ICAS this week warned that a separate tax would encourage “profit shifting” by businesses within the UK.
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