POLLS show that a significant majority of Scots support devo max, meaning all powers transferring from Westminster except shared monetary policy, defence and foreign affairs. So taxation and spending, or full fiscal autonomy (FFA), is an intrinsic and indistinguishable keystone of devo max. Without FFA in the mix you don’t have home rule, you have a constitutional fudge and the worst of both worlds with Westminster controlling the key economic levers and a Scottish Parliament with one hand tied behind its back.

Labour are feverishly promoting the £7.6 billion black hole scare-story to put people off FFA but it’s a myth. Firstly because it assumes oil prices won’t ever recover, and even a moderate to $70/80 would wipe out any additional deficit. Secondly, FFA will give the Scottish Government powers to balance income and expenditure. The UK has failed to do this and so the UK is running a deficit of £75bn and a debt of £1.5 trillion. As black holes go, Westminster has what’s known as a “super massive”.

The choice in this election is between cutting vital services (Tory/Labour austerity) or to borrow modestly in the short term to grow your economy creating jobs and reducing demand for welfare in the medium term (SNP). Westminster austerity will cut off crucial spending that fuels growth so Labour’s desperate attacks on FFA don’t add up economically.

FFA is the key to rapid economic growth and prosperity for Scotland. Here are five key ways Scottish FFA can balance the books, cut the deficit, raise revenues and create jobs.

1. Refocusing the economy on SMEs

Small to medium-sized enterprises create the majority of added-value employment in Scotland. SMEs make up 99.3 per cent of Scotland’s businesses, employing 1.1 million (54.7 per cent of all private-sector employment) and representing the biggest opportunity for economic growth.

But despite generating 36.7 per cent of private-sector turnover in Scotland, SMEs are largely ignored in PLC and London-centric UK business policy. FFA offers flexibility to target tax incentives to encourage growth in the SME sector through encouraging best practice exchange, increasing skills, confidence and ambition, innovation, internationalisation and competitiveness.

2. Targeted tax incentives

Business For Scotland made the case to the SNP policy team to replace the three per cent Corporation Tax cut policy with targeted tax reliefs to encourage business behaviours that generate faster job creation and economic growth. As the champion of the SME sector in Scotland, we also argued for prompt payment measures for small businesses to be put into law. With both of these and several other innovative business-focused policies now forming SNP policy, we can see the Scottish Government understands that SMEs hold the keys to rapid economic growth.

The UK Government is refusing to devolve Corporation Tax and so it is only with FFA that these vital job creating tax powers can be deployed to Scotland’s benefit.

3. Increasing research and development (R&D)

FFA includes policies to increase overall revenues through targeted tax incentives matched to bespoke grant support for companies to increase investment in R&D. Scotland lags three per cent behind the UK average in productivity but up to 40 per cent behind Norway’s, and significantly behind other comparable northern European economies. Scotland spends 1.25 per cent of GDP on R&D, and faster growing, more prosperous smaller nations including Norway, Finland, and Denmark, spend an average of 3.4 per cent. The innovation think tank Nesta calculated that building towards an R&D spend of 3.4 per cent of GDP over a five year period would grow Scotland’s economy by around £12bn a year.

4) Abolishing Air Passenger Duty (APD)

APD has increased by 160 per cent since 2007, reflecting the level of tax that Heathrow and Gatwick can demand. But it is too high for airports outside London and the southeast.

Scotland’s leading airports jointly stated: “APD will over the long-term reduce traffic and connectivity from Scotland’s airports, impacting on inward investment, trade and competitiveness. By 2016, it is estimated that £210m per annum less will be being spent in Scotland by inbound visitors because of APD.”

The Calman Commission recommendation to devolve APD was ignored. APD devolution faces major opposition in Westminster so without a staged approach to FFA it is unlikely this power will be devolved.

The tourism sector is worth £4.3bn in direct expenditure from overnight visitors and provides employment to at least 185,900. Tens of thousands of new jobs would be created by getting rid of APD and tourism revenue would increase.

5) Reducing VAT on Tourism

Twenty-one out of 28 EU nations have lowered VAT on tourism-related activity. Unfortunately, as with APD, the rate of VAT on tourism is set by London’s needs.

Ireland, where the rate is half of the UK’s, provides strong evidence of economic benefit creating 23,324 direct jobs in the tourism industry since the VAT reduction in July 2011 and an additional 10,728 indirect jobs elsewhere due to a multiplier effect. That’s 34,000 new jobs in a tourism sector roughly the same size as Scotland’s.

This move in terms of increased tourism spend and lower welfare spend, combined with higher national insurance and income tax revenues, should be worth at least £1bn a year to Scotland.

If Scotland had FFA we would have the power to do all of this and grow our economy at unprecedented rates, thus demonstrating conclusively that Scotland would be better off as an independent partner to the other countries of these isles but worse off by remaining a region without fiscal autonomy.

Just the few policies highlighted here would make five per cent growth attainable for Scotland and that is why Westminster is scared of full fiscal autonomy and Scotland isn’t.

Gordon MacIntyre-Kemp is the founder and CEO of Business for Scotland.