SNP leader Alex Salmond wants to cut Scotland’s rate of corporate tax to 3 per cent below that of the rest of Britain – which stands at 23 per cent but is due to fall to 20 per cent in 2015 – claiming that this will attract investment, boost growth and create 27,000 Scottish jobs over the next two decades. And there is no evidence that it would work.
Between 2006 and 2012, successive federal administrations in Canada slashed corporation tax from 21 per cent to 15 per cent claiming that companies would use the savings to hire more staff, invest in research and buy new equipment. Instead, they hoarded the cash and hiked pay for their executives, adding to the national deficit and paving the way for more cuts in spending.
Nobel-winning economist Joseph Stiglitz called corporation tax relief “just a gift to the corporations increasing inequality in our society”.