Not only could the prospect of a heavy financial penalty accelerate the "brain drain" out of Scotland, but pension firms fear that the perception of a "semi-detached" Scotland could deter savers and investors living in England.
Most customers of the big Scottish pension companies are actually English. The industry is concerned that people south of the border might feel their investment would be "at risk" and that salesmen from English rivals might drop hints of being paid out in "funny money" in 20 years time.
"We want ministers to say loud and long that nothing like that is implied," said Grant Baird, executive director of Scottish Financial Enterprise, the industry's representative body. The devolution White Paper went some way to reassuring the industry that savers with Scottish companies would not be put at a disadvantage, but for the SFE, the "level playing field" can't be stressed too often.
Government attachment to the tax-raising power was reaffirmed yesterday by Peter Mandelson, the minister without portfolio. During a visit to Scotland to support a double "Yes" vote in next month's referendum, he said it was "very important for a Scottish parliament, for its credibility, to have that financial responsibility of tax-varying powers". The new parliament could raise or lower basic rate income tax by up to 3p in the pound.
The SFE and its members have tried to avoid being drawn into the political argument over home rule. "Banks don't have votes," observed Mr Baird. However, in probing the detail of devolution they inevitably provide ammunition for the "No" campaign.
The tax-varying powers are, according to the SFE, "more worrying" than before the White Paper. Martyn Jones, senior tax adviser with the law firm Maclay, Murray and Spens, warned that Scots might leave the country rather than pay higher taxes.
While a tartan tax of up to pounds 660 a year might be bearable to a patriotic Scot, viewed as lost investment a more impressive figure emerges. Mr Jones calculated that for somebody in their 20s, with 40 years of work ahead, who could have invested the money at a modest 10 per cent return, it represented a potential loss of some pounds 300,000 - or up to pounds 1.5m if the individual lived to 90.
"I can't see how a bright young Scot will be discouraged from joining the drift that already exists, either south to England or to other parts of Europe," Mr Jones said.
Home rule supporters dismissed the SFE claims as "spoilers". David Heald, a professor of accountancy at Aberdeen University, said if extra tax was levied it would be "because collectively Scotland wants a better standard of living".Reuse content