I am thoroughly enjoying the ongoing debate over what powers a devolved Scotland should and should not have, particularly the discussion surrounding Corporation Tax given how crucial and fragile the economy is at the moment, north and south of the border. Former BOS Chief Executive Sir Peter Burt is the latest to lend his opinion on the matter and it is pleasing to see that he is backing Scotland to set its own rates.

Opponents to the suggestion that Scotland should set its own corporation taxes tend to immediately point to Ireland and the supposed result of the low 12.5% that was, and still is, applied to companies over in the Republic. It is classic ‘post hoc ergo propter hoc’ philosophy to suggest that just because Ireland had a low Corporation Tax before it sunk into a deep recession, then that said tax was a significant driver for the current malaise. It was, of course, the banks’ misreading of risk and heavily-impaired real estate assets that were the main problems.

There is of course a risk that a race to the bottom takes place of Scotland is allowed to set lower rates. Ireland had a 12.5% tax rate to kick-start the Celtic Tiger, Scotland then brings in 12.5% to drive its economy ahead of the rest of the UK and then England, Wales and Northern Ireland feel they have to follow suit and suddenly it’s a Sterling vs Euro issue that tears the continent in two. A scorched earth tax policy with all players too cautious and too poor to move back to a correct level.

Nonetheless, I say Scotland’s needs and opportunities make it worth going for and the beautiful diversity of these shared isles can once again be harnessed to maximise the Laffer Curve for the UK’s benefit. If George Osborne’s preferred 24% is closer to the correct figure for tax rates then it will quickly become clear when Scotland has an anaemic 12.5% and few new jobs to show for it. We already have a drive towards nuclear power down South and a drive towards renewables up North, we have a drive towards high fees down South and a continued drive towards state-funded education up North so we can continue this devolution adventure and experimental settlement by maintaining tax rates as they stand in England and Wales but reduce rates in Scotland to ascertain what that flexibility will do for the UK and then, if necessary, act accordingly, either through rUK following suit or Scotland lifting rates higher again with the strategy deemed unsuccessful.

As things stand, why would a large company base itself in Scotland when it can be snugly located outside London with the vast travel options that Heathrow, Gatwick and Stansted provide? RBS has long been expected to pack up and head South, it is even sneered at in the City for having its base up in ‘Jockland’. Such attitudes don’t shift easily and will regrettably deter emerging entities from basing themselves in Scotland. Furthermore, the destinations that Glasgow and Edinburgh from its airports offer pale in comparison to the capital cities of small-medium sized capital cities across Europe. Scotland is uniquely disadvantaged by its position within Europe and its situation as a state within a country and some sort of flexible solution is required within the devolution settlement. The Scottish Government cannot be expected to grow the economy, and blamed for not doing so, when it doesn’t have the necessary tools and does not have oil revenues to use to its competitive advantage.

Of course, were the eminently sensible policy of fiscal autonomy to be granted through this coming Scotland Bill then devolving Corporation Taxes would come with it but it looks increasingly unlikely that the federal Liberal Democrats will leverage its position within the coalition. A solution to the current constitutional imbalance and problems with the Barnett Formula will continue it seems.

It is difficult to have a low tax nation with a large public sector and a relatively high minimum wage but that is a balancing act that Scotland can learn, and achieve, in time. There is more to gain from a distinctly Scottish business market setting distinctly Scottish rates of corporation tax than there is to lose.

Scotland can reap similar benefits as Ireland while being wise to any potential pitfalls. Lower taxes, higher growth, more jobs and a prising away of the Scottish nation from the distant cash cow of the City of London. Even former RBS chiefs agree it is a good idea. We just need a way to Make It Happen.