ONE of Scotland's most successful entrepreneurs has given his backing to ministers as they publish their full case for Scotland to be given control over its corporation tax.

Jim McColl, of Clyde Blowers Capital, lent his weight to the argument that the power to lower the tax would help economic growth.

The founder and chief executive of the engineering firm said: “Scotland needs all the powers at its disposal to give people reason to bring their business and investment to Scotland.

“Corporation tax would provide a significant fiscal lever to provide necessary incentives providing a major boost for the Scottish economy at a critical time.”

Holyrood ministers are determined not to be left behind if their Northern Ireland counterparts are handed this power in recognition of the border they share with the Irish Republic, which has set a lower rate than the UK. The paper setting out Scotland’s case will be published this week.

But there have been cautious voices from the Institute of Chartered Accountants of Scotland, who have warned of a “race to the bottom” involving the different nations of the UK and “profit shifting” by companies to exploit loopholes.

Elspeth Orcharton, assistant director of tax at the institute, said determining the tax residence of companies and branches would create additional administrative burdens.

“If you ask businesses if they’d like to pay less tax, they say ‘yes’,” she said. “However, a tax cut in itself can’t deliver a complex public financial model for a small country in a global business world.”

Labour’s finance spokesman, Richard Baker, said: “As the ICA warns, reducing corporation tax for big businesses would yield lower tax receipts which would impact on the Scottish budget. How would this be afforded when the Scottish Government has made so many costly pledges?

“It would have to be made up in other ways, by raising other taxes or cutting harder. We know from figures produced by the Treasury that if the Scottish Government were to reduce corporation tax rate to 12.5%, the costs to the Scottish budget could be as much as £2.6 billion per year.

“It is all very well calling for new powers but the focus should be on boosting the Scottish economy, not more powers for ministers.”

However, Finance Secretary John Swinney insisted: “Scotland must have control of the key economic levers and corporation tax is a vital source of competitive advantage in a global economy.” He said evidence from around the world showed a competitive corporation tax regime had been a feature of the economic success of many countries.