TAX NEWS - JUNE 2010

Scottish Tax: Business leaders in bitter row over Scottish tax powers

Business leaders are at loggerheads over handing Scottish ministers full tax-raising powers, with the row descending into an increasingly personal slanging match

by  Simon Johnson, 04 June 2010 -- A group of entrepreneurs and academics, some of whom have links to the SNP, launched a campaign for Holyrood to be given much greater responsibility for raising the money that is spends.

But they bristled at accusations from CBI Scotland, the leading business organisation, they have failed to provide "detailed and sophisticated" arguments for the change.

Jim McColl, one of the campaign leaders, accused Iain McMillan, CBI Scotland's director, of being out of touch with his members and failing to represent their views.

But a bemused Mr McMillan told the Daily Telegraph that Mr McColl was smearing the CBI to avoid the questions it had posed about the tax plans.

He said the CBI represents 26,000 businesses north of the Border, and contrasted this with the campaign group, which he branded "a handful of other business leaders (who) only represent themselves."

The bitter row broke out after the new coalition Government promised to implement the recommendations of the Calman Commission, which said Scottish ministers should have the power to raise and collect their own income tax.

A 'Campaign for Fiscal Responsibility' has been launched to highlight "fundamental flaws" in the commission's recommendations and argue for much more radical tax powers to be transferred.

Among those spearheading the operation are Mr McColl, chairman of Clyde Bowers and one of Alex Salmond's economic advisers, and Ben Thomson, an investment banker and confidante of the First Minister.

But this newspaper reported that Mr McMillan has warned a separate tax regime would increase business costs and leave a gaping black hole in Scotland's finances.

Speaking at a press conference launching the campaign, Mr McColl referred to our report before launching a stinging attack on the CBI and its Scottish director.

"The CBI in Scotland I think have got significantly less than 10 per cent of the business leaders in Scotland. Iain won't have polled his members – I know many of them and I know their views are supportive of what I'm saying," he said.

"This is a statement by an individual who administers a business organisation in Scotland. It's not representative of business in Scotland in general."

But Mr McMillan, who sat on the Calman Commission, said the CBI accurately represents the views of its members and its council, which decides the organisation's policies.

Instead he suggested Mr McColl had resorted to the attack to avoid explaining why full fiscal autonomy would be beneficial when Scotland's tax income does not currently cover its expenditure.

"By calling into question my legitimacy and the legitimacy of the CBI, he appears to be using that to avoid the question put to them," said Mr McMillan.

"The CBI is more representative of business opinion than Mr McColl. He and a handful of other business leaders only represent themselves."

Branding the campaign's call for full tax-raising powers a "very superficial argument", he said Mr McColl and his colleagues have failed to answer "many questions" about it.