Sir Tom Hunter, the Scottish serial entrepreneur, has called for corporation tax to be cut in Scotland for key global growth areas such as big data and artificial intelligence (AI), as to drive increased levels of high-value investment.

The comments were made as part of the foreword to a new Oxford Economics report, titled Lessons from Ireland for Scotland’s Economy, in which he proposes tax reform for targeted areas as one part of the answer for clinching more global investment opportunities.

“Here’s my suggestion to Holyrood and Westminster – make all of Scotland a 15% 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,” Hunter wrote.

In April of this year, corporation tax — which is UK reserved — was raised from 19% to 25% for companies with over £250,000 in profits.

“The answer is not progressive taxation as we learn from the Irish experience – it’s a focussed, low (and at one point no) tax system that targets sticky jobs in growth sectors in a highly focussed manner,” he noted.

On the “Irish experience” specifically, Hunter referenced that Ireland drives foreign direct investment (FDI) through multiple incentives, “not least a 12.5% corporation tax rate moving to 15% in 2025.

“In 2021 this drove 249 such investments compared to Scotland’s 122,” Hunter mentioned.

Recommended reading

• Corporation and Startup Collaboration Faltering in the UK
• Scotland Outpaces UK and Europe for Foreign Investment
• Scots Economy Recovering Ahead of Rest of UK

To help further bolster economic growth, Hunter suggested Scotland should grow its own robust sovereign wealth fund, taking inspiration from the Ireland Strategic Investment Fund.

Writing on the recently announced Scottish Innovation Fund drawn up by the Scottish Government, Hunter noted: “The Innovation Fund of circa £100m over ten 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.”

Hunter also described the announcements of two new Investment Zones for Scotland in June — the Glasgow City Region and the North East of Scotland — as “welcome,” but also that “we are talking £16m per annum for five years; not to be sniffed at but hardly jaw dropping either.

“Moreover all of Scotland should be a competitive location not just the Glasgow City Region and the North East of Scotland.”

Before concluding his foreword, Hunter mentioned that “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.”