Devolving VAT would be an added incentive for ministers to introduce policies to grow the economy, Murdo Fraser said

Holyrood should be given the ability to vary the rate of VAT in Scotland once Britain leaves the EU, a leading think tank has suggested.

Reform Scotland, an independent policy group, said that there was a clear link between control of sales taxes and economic performance.

Devolving VAT, or value-added tax, to Scotland would hand the Scottish parliament responsibility for raising 60 per cent of what it spends and give politicians more flexibility in how they raised revenue in Scotland.

Although devolution of VAT is banned under present EU rules, that will not apply after Brexit.

VAT raises about £10.2 billion in Scotland every year, the third largest revenue from tax after income tax (£12.7 billion) and national insurance (£10.4 billion). The main standard rate