Forbes warns Salmond over tax burden

FORMER US presidential candidate Steve Forbes will urge Alex Salmond to avoid burdening Scotland with a punishing tax regime when they meet at Gleneagles this week.

Forbes, the chairman and chief executive of the eponymous US publishing giant, will be "in conversation" with the First Minister tomorrow at a key conference of business and political leaders.

Forbes plans to question Salmond on his policies, notably taxation, in front of an audience of 200 Scottish and international delegates.

In an interview with Scotland on Sunday in advance of the Forbes CEO Forum, he said: "I'm looking forward to getting his perspective on a number of issues. I want to find out what the 'tartan tax' really means. I hope he will come to take the view that if you have a benign tax regime you can become an even more vigorous economic centre in the way Hong Kong and Singapore have done over the years," he said.

Forbes' questions on tax will take on a greater significance if, as widely expected, the Calman Commission recommends more sweeping tax powers for Holyrood when it reports tomorrow.

Forbes offered a vote of confidence in Scotland's financial services sector in advance of the meeting by saying it is "in the genes". He added: "Scotland can remain a centre of finance."

Forbes believes Scots can hold on to their reputation of trust in international markets despite the fall-out from the demise of its big banks and a shared sense of failure.

Giving reasons for his optimism, Forbes said: "Scotland has become a place where people are looking for economic growth and innovation. Scotland now has an opportunity in this time of economic turmoil while everyone is focused on near-term difficulties."

The conference brings together chief executives, academics and politicians from around the world to discuss innovation as part of Homecoming Scotland. Forbes says it will give him a chance to combine business with ancestry research. His grandfather, an Aberdeenshire-born journalist, emigrated to the US in 1904 and set-up Forbes magazine in 1917.

Forbes hopes the conference will lead to more business being done between Scotland and the US. He describes Donald Trump's golf venture on this side of the Atlantic as a "win-win for everyone". He says: "Having that kind of capital flow across water will help create opportunity and growth."

However, contrary to economic reports in the UK last week, he is not convinced global recovery has started. "The recession has bottomed out. How vigorous the recovery will be in the US will depend on how successful the Federal Reserve is in

getting the economy fully working. It's only partially working at the moment. As soon as the US starts to have a true recovery the better off we're all going to be."

Forbes stood as Republican candidate in the US presidential primaries in 1996 and 2000.

He is critical of some of President Obama's actions on the economy so far. He told Scotland on Saunday: "The spending approach was a misguided one. It takes a long time for the government to gear up to spend."

In May, he says only $31 billion of the £700bn Obama pledged to pump into the economy was spent. He argues a more effective policy in the short term would be to reduce payroll tax which would have given employees more money and reduced the cost for companies. "It was a clumsy way to go about it," he said.

He does not think the financial services sector will be as "bloated" when it recovers from the recession. He blames the crisis on the US central bank, the Federal Reserve, printing too much money from 2003 onwards. "If the Fed does its job now you'll see a resurgence in financial services, but much saner and healthier growth."

Other speakers at the conference include Sir Bill Gammell, chief executive of Cairn Energy, Lady Barbara Judge, chairman of the UK Atomic Energy Authority, and Neelie Kroes, the European Commissioner for Competition.

Also speaking before the conference, Philip Carmichael, president of Asia and Pacific at Haier Group, the world's biggest manufacturers of refrigerators, praised Scotland for its work in international markets.

He said Scottish Enterprise and Scottish Development International have built strong teams in China to help firms through bureaucracy. "Scottish companies that are ignoring Asia are doing so at their peril," he said.