Ian Hamilton QC

by Mike Mackenzie

Iain McWhirter generally seems to have a balanced and clear minded view, which is what makes it all the more surprising that he uses the following phrases in his article in the Herald of 3rd Sep 07,
 
‘and who note with dismay that plutocratic captains of industry are paying less tax than cleaners. Many of our top companies are paying no corporation tax at all’
 
He is no doubt using poetic licence but these statements are just not true. I would challenge him to cite examples of this claim.

Yes, there are tax loopholes encouraging directors to award themselves obscenely large bonuses. Yes, there is a tax regime which provides positive incentives to plunder our companies for short term gain. Yes, there is a tax system which penalises profit retention as investment. We should change this because more than anything we need to encourage a climate of long term investment for long term benefit. You cannot achieve sustained economic growth in a business culture wholly committed to the quick buck.
 
There is also a clear distinction which must be made between corporation tax and personal tax which McWhirter seems unaware of. SNP policy of cutting corporation tax is the best way to revitalise our sluggish economy. Corporation tax paid in Ireland at much lower rates exceeds by far that taken in Scotland despite their smaller population and is why they are able to afford massive upgrading of infrastructure and improvement of services.

Lower corporation tax is the one measure that government can reasonably and effectively take to make our economy competitive. Lower corporation tax is the way to incentivise the retention of profits for research and development and for the expansion which empowers the dynamic of a healthy economy. We need to revitalise business so that small businesses can become big businesses and can compete on more even terms with global businesses who have core strategies of location where labour costs and taxation are low.

Today’s lean and hungry tigers always become tomorrow’s fat and lazy cats before they fade away. These need to be constantly replaced in the dynamic of a healthy and prosperous economy. What better way to replace them than by ‘growing our own’ and creating the financial and economic culture in which this is possible.
 
Compare this with successive Tory and New Labour policy of paying out huge grants as bribes to companies who locate here. How many of these companies have stayed when the grant aid gravy runs out?
 
Nevertheless, McWhirter is correct in suggesting that the gap between rich and poor has grown significantly under Thatcher and Blair/Brown. Rather than reactivating Old Labour mantra he should be signing on to today’s progressive economics. Rather than a return to the politics of envy we need to move on to an aspirational politics. Rather than banging on this old drum Iain needs to open his ears to what even right wing economists are now referring to as the ‘drag factor’ of the entrenched poor and realise that when people are in a hole what they need is a ladder.

In terms of fiscal policy this must be constructed in the form of simple, clear and progressive taxation that provides a commitment to and is a mechanism for delivering social justice. Instead Gordon Brown has grown a financial jungle teeming with snakes and with precious few ladders. Little wonder the disaffected poor opt out of the game.
 
If Iain McWhirter has any advice for Wendy Alexander and she really wants to make her mark and help those on lower incomes she should sort out Gordon Brown’s tax credit mess. I wish her luck. If she can sort out the cynical subterfuge of this system she will win my admiration if not my vote.

 

This entry was posted on Thursday, September 6th, 2007 at 2:03 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.