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Serial entrepreneur and philanthropist, Sir Tom Hunter, is calling for a corporation tax rate of 15 per cent for life sciences and medical technologies and software, big data and AI.
Hunter, who sold first business, Sports Division, for £290m, was speaking following the publication of a new report entitled ‘Lessons from Ireland for Scotland’s economy’.
The document has been produced by Oxford Economics on behalf of the Hunter Foundation to see what lessons Scotland can learn from Ireland.
Hunter makes a series of suggestions in his forward but the most eye-catching one is calling for a 15 per cent corporation tax.
The corporation tax across the UK, including Scotland, was recently increased from 19 per cent to 25 per cent.
Hunter said: “Here’s my suggestion to Holyrood and Westminster – make all of Scotland a 15 per cent corporate tax zone for three key global growth sectors: renewables and low carbon manufacture and services; life sciences and medical technologies and software, big data and AI.
“The Irish experience tells us we will net more tax, more jobs and more value from this highly focussed approach with one agency delivering that approach than we will with our current strategy. And that one agency should deliver domestically and for inward investment.
“And as the Ireland Strategic Investment Fund starts to deploy their sovereign wealth fund to support economic growth we need to compete and, in time, grow our own fund.
“The Innovation Fund of circa £100m over 10 years launched a couple of months back is frankly not enough – R&D funding in Scotland is circa £4.5 billion per annum; £100m will transform very little indeed.
“But we also have a competitive advantage in our universities, something we should double down on aligned to these three key growth sectors.”
Hunter said lower corporation tax drives investment.
“Ireland drives foreign direct investment (FDI) with multiple incentives, not least a 12.5 per cent corporation tax rate moving to 15 per cent in 2025,” he said.
“In 2021 this drove 249 such investments compared to Scotland’s 122. The other key component – aligning education to economic development; per 1000 of population 39.9 were STEM graduates compared to Scotland’s 20.9.
“From 2012-2022 Ireland’s GDP grew on average 8.9 per cent per annum compared to Scotland’s rather anaemic 0.9 per cent.
“They are home to nine out of the top 10 pharmaceutical companies in the world and 14 of the 15 top MedTech companies.
“And recently the Irish government forecast a staggering Euro 65 Billion surplus over the next three years.
Hunter said the announcement on two new investment zones for Scotland was welcome but ‘hardly jaw dropping’.
“Moreover all of Scotland should be a competitive location not just the Glasgow City Region and the North East of Scotland,” he said.
“It’s time for a grown-up debate and action over how we make Scotland an economic powerhouse. We need to stop doing those things that don’t add any value and focus on what delivers otherwise, with a ticking demographic time bomb, we will leave an unbelievably appalling legacy for the next generation of Scots to contend with.
“We at the Hunter Foundation do not claim to have all the answers but we do believe through constructive debate we will get better answers and outcomes for Scotland.”