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SURVEY FINDS SCOTTISH BUSINESS TAX COMPARABLE TO UK

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Businesses in Scotland are benefiting from the Executive placing growing the economy at the heart of its agenda. ...
Businesses in Scotland are benefiting from the Executive placing growing the economy at the heart of its agenda.

This is highlighted by the Executive delivering key business priorities in promoting conditions for long-term sustainable growth, investing in skills and entrepreneurship and investing in transport infrastructure to drive the economy.

Scottish businesses also benefit from the common-sense approach being taken to public finances by the Executive. This is illustrated by the main findings of the Comparative Study of Business Tax Revenue, published today by the Executive, which show:

Scottish business tax revenue is comparable with the UK as a whole

Taking Corporation Tax, employers' NI contributions and business rates together, Scottish tax take as a proportion of GDP was lower than almost all the countries examined

Adding in business transport taxes, Scotland is clearly in the set of lower tax economies when revenue is compared with GDP

When we look at revenue from all taxation, both business and personal, relative to GDP, Scotland is below the European averages

The report was prepared by Executive economists in response to a recommendation from the reconvened Scottish Manufacturing Steering Group.

Deputy first minister and minister for enterprise and lifelong learning Jim Wallace said:

'Business and the Executive have a shared goal. We want a Scotland where the economy grows, firms prosper and wealth is created. I have said time and time again that it is businesses which create wealth, not governments. We will continue to do what we can to help businesses.

'These finding show that, when it comes to business tax, Scottish companies compete on a level playing field with their UK and EU counterparts. In fact, there are even times when they are playing with the wind at their back.

'Our support for Scottish business takes many forms. By the end of 2006, spending on transport will reach £1bn per annum. Business will benefit from t his. We are investing resources and changing the law to make our communities safer. Business will benefit. We are making money available to give school pupils more exposure to the world of business. Business will benefit from this and so will the country as a whole.

'We will continue to work with the business community to see how we assist them and we will continue to bring forward initiatives across the Executive which will help our economy grow.'

Minister for finance and public services Andy Kerr said:

'Growing the economy is our top priority. The executive has placed this at the heart of its agenda and is delivering business priorities in important areas like transport, skills and broadband.

'And the solid financial foundations put in place by the UK government are creating an environment where all businesses - large and small - can succeed.

'Any even-handed examination of business taxation has to be made against that backdrop. Taxation is just one aspect of the environment in which businesses are operating - issues like transport infrastructure, IT support and a skilled workforce are crucial.

'The report shows Scottish business taxation is roughly comparable with the UK as a whole and Scotland fares well when compared to most of the other countries examined.

'The executive and business share the exact same priority - developing the skilled workforce which grows the economy which creates prosperity. We have laid the foundations to deliver this shared priority - and this report underlines that Scottish businesses are operating in an environment where they can achieve that goal.'

The report on Comparative Business Tax Revenue was prepared by Scottish Executive economists in response to a Recommendation from the reconvened Scottish Manufacturing Steering Group chaired by Dr Chris Masters.

Drawing on data published by the OECD and in the executive's own government and Expenditure Revenue Statistics the report compares busines s tax revenues relative to GDP in Scotland with those in the UK as a whole and with Scotland's competitor economies.

Taking Corporation Tax, employers' NI contributions and business rates together the revenue from business taxes in Scotland are equal to 9.2 per cent of GDP on the latest available data. This is broadly equal to the 9.0 per cent figure for the UK as a whole. Revenues from comparable business taxes in many of our European competitors are higher (e.g. France at 15.1 per cent, Finland at 14.6 per cent and Germany at 9.4 per cent of GDP). Revenue in Ireland and the US are lower than Scotland at 7.1 per cent and 7.5 per cent.

If business transport taxes are added in as well Scotland is part of a group of lower tax economies. Scottish revenue is equal to 10.4 per cent of GDP and is the same as the UK as a whole and Germany. Revenue in France is equal to 16.1 per cent of GDP and 15.1 per cent in Finland. The US and Ireland figures are lower than the Scottish one at 7.7 per cent and 8.0 per cent.

Looking at all taxation, both business and personal, revenue in Scotland is equal to 37.1 per cent of GDP, compared with 37.4 per cent for the UK as a whole. The EU12 and EU15 averages are 40.6 per cent and 41.6 per cent.

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