Helping Scotland’s businesses: SNP should first use the powers they’ve got

Speaking after FMQs today, Annabel Goldie MSP, Scottish Conservative Leader, said:

"The First Minister likes to wax lyrical at every opportunity about the powers he doesn't have – like Corporation Tax, which he wants devolved.

"The fact is that, according to the Scottish Parliament's own researchers fewer than 3% of all businesses in Scotland would benefit. And by the Government's own admission their estimated 27,000 new jobs would take 20 years.

"The First Minister has got a tax power which he can use right now. In an SNP press release we are told that the small business bonus, delivered by Scottish Conservative votes in the last parliament, created 40,000 new jobs in just 4 years, at a fraction of the cost of the First Minister's proposal for Corporation Tax.

"Yesterday's budget was silent on extending more help to more businesses, large and small, to cut their business rates and create more jobs right now, with the powers we've got. Rather than bleat about what he doesn't have, Alex Salmond should make the most of what he does have."

1) Below is the information provided by SPICe:

Number of firms in Scotland likely to pay the full rate of CT = 4-5,000 or under 2% of all businesses in Scotland (290,000). This figure assumes all businesses with more than 250 employees (2000) generate taxable profits of over £1.5m most years and 80% of those with 50-249 employees (2500). For comparison HMRC give a figure of 46,000 as the number of businesses in the UK paying the main rate of CT in 2008-09. Fair to assume that about 10% of these businesses would have a big enough presence in Scotland to pay the main rate.

If the main rate of CT was reduced from 23% then this would also benefit businesses with taxable profits of£0.3-1.5m. Businesses with small profits (>£0.3m) pay tax at 20% but if profits increase above £0.3m then the tax rate gradually increases to bring the rate up to the main rate. This rate is actually higher than the main rate and is known as the marginal small company rate (MSCR).

I estimate that about half of all businesses in Scotland with 20-49 employees (5000) plus the balance of the businesses with 50-249 employees (600) are likely to have profits of £0.3-1.5m most years giving a total of 3000 businesses paying the MSCR. Again for comparison the UK figure for the number of businesses paying the MSCR is 38,000.

Combining the main rate and the MSCR numbers gives a total of 7-8000 business which might benefit from a reduction in the main rate. This is under 3% of all businesses in Scotland.

2) Please click on the link below for the SNP's press release from February 2011, highlighting how many jobs were created by the reduction in business rates – a process that was accelerated by Scottish Conservative votes in the last parliament.

http://www.snp.org/node/17750

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