Professor Hervey Gibson, who teaches economics at Glasgow Caledonian University, was one of two peer reviewers for the SPICe paper published last week. Entitled Understanding Corporation Tax Modelling, the report was written by the Scottish Parliament's in-house economists, Richard Marsh and Scherie Nicol.
Gibson told the Sunday Herald the paper, which analyses the Scottish Government's calculating methodology or "model" for translating reductions in tax rates into new jobs, showed that there were "relatively small but nevertheless significant benefits some way down the line" from corporation tax cuts.
Known as the Computable General Equilibrium (GCE), the Scottish Government's calculation suggested in 2011 that a 3% reduction in corporation tax would expand the economy by a total of 1.4%, adding 27,000 jobs in 20 years.
Gibson said that the SPICe paper endorsed the case for cutting corporation tax "the sooner the better", saying the benefits to Scotland, where relatively little corporation tax is paid, outweighed the potential disadvantages of loss of revenue. He compared this to London, where a cut would lead to a severe reduction in revenue but where there was no room for new business attracted by the lower rate.
He claimed such contrasting conditions made the case for regional corporation tax variation across the UK, but a cut in Scotland was not going to happen without constitutional change, so "yes, this makes the argument for independence".
"A cut is desirable, and the sooner the better. There are short-term negative effects to cutting the tax, as you reduce revenue from existing businesses, so now is a good time … when oil revenues are strong."
The SNP have already seized on the SPICe report to support the argument for a separate Scotland, claiming it "backs up analysis by the Scottish Government that a reduction in corporation tax can increase economic growth and boost employment."
Rates of corporation tax are one of the main battlegrounds of the independence debate
But as Gibson acknowledged, the SPICe paper also raised significant questions about a tax cut, which have already been posed by Professor Joseph Stiglitz, the Nobel Prize-winning economist and adviser to the Scottish Government. In May, it was revealed he had said lowering corporation tax rates did not lead to new investment and was "just a gift to the corporations, increasing inequality".
The paper makes clear corporation tax in the UK is already among the lowest in the OECD, and is set to drop further. In a survey of factors that make a country attractive to visitors it ranks only 13th, beneath factors such as stability and transparency of the political environment.
More pointedly, SPICe looks to the example of Ireland "which has the lowest headline corporation tax rate of any OECD country", comparing its gross domestic product (GDP) and gross national income (GNI) figures to show a large and growing gap between the wealth of Irish residents and companies based there.
IT also hints that Scottish Government calculations about jobs are determined by its own politically inspired assumptions, rather than generated by the model itself:
"The Scottish Government report assumes every percentage point decrease in corporation tax will increase the number of foreign direct investment jobs by 6%. Based on this assumption, the 3% point reduction in corporation tax yields an 18% increase in the … jobs gained by Scotland … these calculations are undertaken outside of the CGE model."
"That is economist-speak for back-of-the-fag-packet," one top academic economist told the Sunday Herald.
Stephen Boyd, STUC assistant secretary, said it was not immediately obvious that the report endorses the Scottish Government's conclusions, adding: "CGE modelling is of limited practical relevance, especially in this instance. It does not take into account the current failure of the UK corporate sector to invest its large cash surplus."