THE CELTIC KITTEN

Celtic Comrades

Many of you will remember my glowing praise for Ireland, Iceland and Norway as my Arc of Prosperity. Small independent nations with thriving economies.

Okay, that didn't go quite so well. Iceland and Ireland went bust and my critics rather cruelly renamed them and my dream of a New Mediaeval Scotland as the Arc of Insolvency.

Well, just like Robert the Bruce before me I'm no quitter. I stand on the verge of writing myself into the annals of Scottish History as the modern liberator of my nation. A Willie Wallace for the modern age.

Rousing the rabble and stirring up national resentments is second nature to me. It's easy.

The problem is making the whole thing work. How will my New Mediaeval Scotland pay for itself? We all know that Scotland has a disproportionately high public sector. That has to be paid for, through taxes. Even with all of the oil I'm about £ 14bn short every year so the answer has to lie in borrowing and in the private sector; multinationals, PLC's, their support networks of small and medium sized enterprises.

But the vast majority of them are based in London and the South East of England I here you say. The City of London alone brings in £ 60bn of tax revenue every year and Scotland gets 8% of that just for being in the UK. That 8% is more than all the tax revenue from UK oil.

I know, I know, believe me, I know.

So, what to do? Well, here was the wheeze. I had hoped to copy those fly by the seat of the pants merchants over in Ireland by reducing Corporation Tax to 12.5%. That would hopefully mean that some of those aforementioned multinationals, PLCs and supporting SMEs would relocate to Scotland, bringing their tax revenues with them.

Now I've got another pesky economist questioning whether that can be done. Indeed, my old adviser Professor John Kay went so far as to say that the idea of me lowering corporation tax was pure fantasy. Why? Well, because my new bedfellows in the Eurozone are moving to set a uniform rate of Corporation Tax  way higher than the rogue 12.5% that the Irish have got away with for so long. Indeed, my Celtic cousins are likely to see that rate rise as they eventually dig themselves out of the huge economic mess that they are in at the moment.

http://www.heraldscotland.com/mobile/politics/political-news/salmond-in-fantasy-land-over-tax-plans-says-former-adviser.1327806454

So, bang goes my plan for a second Celtic Tiger. More of a meow than a roar.

Big John Swindly gave the David Hume lecture the other evening and suggested that a CT rate of 20% might be the best we can get away with. That's only 3% below the UK rate and I can't see anyone moving north for that.

Time to call my Nobel Prize winning economic advisers, again.

Why don't they ever answer the phone???