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\’Scotland needs lower taxes and less government\’, says think-tank – Mail

John Robertson
\r\nDaily Mail, 18.3.08

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Cutting tax could turn Scotland\’s economy into one of the strongest in the world, a think-tank claimed last night.

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The Reform Scotland report also called for a smaller public sector, less government interference and more cash-raising powers for Holyrood.

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It warned the meausres were vital if the country was to double its growth rate and realise its full potential.

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Reform Scotland chairman Ben Thomson said: "The report shows taht lowering teh overall tax burden and reducing the size of government has a positive impact on economic growth.

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"We would therefore urge all political parties to adopt policies which would deliver these outcomes and bring benefits to the Scottish economy."

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The independent think tank claimed that for Scotland to become one of the most successful nations, it would requier an annual growth rate of 3.5 per cent, sustained for ten to 12 years – double the 1.8 per cebt averaged over the past 30 years.

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The Powers for Growth report, the first from the new body, stressed the need for lowering the overall tax burden, limiting the role of government, greater fiscal autonomy and better statistical information.

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Mr Thonson saidL "Reform Scotland\’s research also recognises that the impact of such policies cannot be fully realised without greater financial powers for the Scottish parliament.

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"If Scotland aspires to match the most successful economies, there are additional benefits to be gained from a tax system that is differentiated from the rest of the UK and provides Scotland with a real platform for higher economic growth.

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"This would also mean that the higher revenues resulting from higher economic growth would stay in Scotland and not return to the Treasury."

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"At present, public spening in Scotland is largely governed by a block grant from Westminster.  Raising more revenue in Scotland would also provide an incentive for greater control of public spending."

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The report welcomed the Scottish Executive\’s policy of reducing business rates for small firms and the council tax freeze as a first step.  But it called on ministers to go further to lower the overall tax burden.

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It also argued that limiting the role of government would allow the private and not-for-profit sectors to develop faster and increase the business start-up rate.

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A spokesman for Finance Secretary John Swinney called the report \’a welcome contribution\’ to the debate over the future of Scotland\’s economy.

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He added: "In particular, we support the case for Scotland acquiring greater fiscal responsibility in order that we can give Scotland a greater competitive edge.

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"As the report says, this would mean that teh higher revenues from higher economic growth would stay in Scotland instead of going to the Treasury in London.

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"Within the existing powers, the Scottish Government has put in place a Small Business Bonus Scheme, benefiting 150,000 small businesses in Scotland, which will deliver real benefits for business all across Scotland in terms of lower business tax."