Nicola Sturgeon suggested yesterday that the time has come when Scotland might need to raise its taxes to meet social need. It seems that the Scottish Labour, Liberal Democrat and Green parties do as well. Only the Scottish Tories don't.
I agree with Nicola Sturgeon: within the constraints of the current devolved powers given to Scotland then she has no choice but tax if she is, as required, to meet social need and balance the Scottish budget. But, as I argued in my Common Weal White Paper on Scottish Tax, this constraint exists because Scotland does not have its own central bank and does not have its own currency, both if which it could have if independent. Nor is it allowed to borrow. The reality is that without these key components that help define statehood there is no choice but balance the Scottish budget, even if to do so might not be what is actually required for Scotland to prosper.
In that case the option being presented by the SNP may not be optimal, but it is the only one that is possible. This needs to be understood. Tax and service provision need not be, and even should not be directly related one to the other in a well managed economy where the aim is full employment and low inflation as well as a comprehensive welfare state. But when constraints, such as those Scotland suffers, are put on that process, outcomes will be sub-optimal. This needs to be said, loud and often.
It may be time to tax in Scotland, but only because there is no other choice.
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It’s a shame so few folk understand the distinction between currency issuers and currency users.
Not so much a shame as evidence of conspiracy, I’d say. Can such a gaping hole in our (supposed) education be anything other than deliberate?
Absolutely with the help of a complain’t neoliberal press
Scottish Labour would already have spent their measely knee-jerk suggestion of an income tax rise about 10 times over on all the areas of policy they complain about. And the effect on consumer consumption would have been negative, presumably not a great idea. Not even Corbyn’s “tax and spend” would have raised the basic rate.
A more nuanced approach is required, especially in Scotland, which doesn’t have so many high-rate tax payers. Other forms of taxation are probably required.
The SNP are planning a comprehensive analysis of all the tax options – most importantly, taking account of the effects of the Fiscal Framework.
It also seems wise to expose the public to UBI pilots, most of whom have never heard of it. I like Patrick Harvie of the Scottish Green Party, but his complaint that we should just get on and do it seems bonkers. Not least because we don’t have sufficient control of social security.
(It’s even more problematic that we don’t have proper data on Scotland’s current sources of revenue when about to analyse options for change.)
The answer has to be yes because as you say other avenues are cut off.
So now it is a question of how and what?
The thing is that, the whole issue of just what sort of home rule the Scottish have from their domestic Parliament (its true nature) will be pulled sharply into focus.
A new debate needs to be created about being allowed to have more room for domestic policy in Scotland – but the ‘I’ word need not come into play. I would advise Sturgeon not to mention it at all in fact. Let the population come to their own conclusion…eventually.
John Law rules OK?
This is the trap set by the Tories through the Smith Commission. You can vary (some) taxes but you ain’t getting any of the other economic levers. And then the Tory mantra of “highest taxed part of UK” may well be true.
I still can’t understand why WM politicians are so desperate to hold on to us.
There is a lot of truth in what you say
the Tory mantra of “highest taxed part of UK” may well be true. Well, who knows what may happen in time, but it’s certainly not the case now, despite it being such an over-used soundbite: the effect of the council tax freeze in Scotland over the years considerably outweighs the freeze on the higher rate threshold
If the SG did increase taxes. The UK government would reduce the amount of public expenditure allocated to Scotland. Proving that Scotland’s very limited control of taxation is all but useless.
Hello RIchard,
Can you help me here? I take great interest in these things although I admit my understanding is poor. Since Scotland needs it’s own central bank to do good things, but the SNP would want an independent Scotland to be in the EU, I assume that’s not compatible with current EU requirements.
I also guess you would be anti-Euro since all Eurozone countries (including those doing well, such as Germany, and those at the opposite end, such as Greece) don’t have control of their own currencies. Well, maybe the Germans do as the dominant partner.
Is that a correct understanding?
On another note, I see these low figures Labour blames on avoidance. Should I be disappointed that it seems they think your tax gap figures are baloney? What can be done to change their mind so they come over to your position?
http://www.independent.co.uk/news/uk/politics/tax-avoidance-cost-uk-economy-13-billion-labour-peter-dowd-a7929666.html
Joining the EU requires a commitment to join the euro
It does not require that the euro be joined, as Sweden proves. So it could have its own currency and central bank
I have no idea what labour are doing – they will be mightily annoying their union partners with this sort of nonsense
Forget tinkering with tax rates. The best thing would be for Scotland to abandon the SNP and put aside their dreams of independence for now. Scotland should get behind the Labour Party and help us put an end to neoliberalism in the UK for good.
Then who knows what might be possible?
Scottish labour has to move on from its own past which was too tainted by neoliberalism if this is to happen
I’m sure Adam is well aware that the SNP have offered support to Corbyn at Westminster. Not only was that refused, but Corbyn then proceeded to repeat all the lies about the SNP which were given to him by his Scottish colleagues.
Scottish Labour are clueless, and failed to gather more than a minute fraction of the anti-independence vote in the recent GE. Almost all of their gain in vote share was in one constituency, that of Blairite Murray – who attracted the unionist Tory voters of Morningside in Edinburgh. Unless there’s a Corbynite coup, which seems unlikely, Scottish Labour will continue to be centrist and become even less electable.
After their disastrous alliance with the Tories in the Better Together campaign, the Scottish branch of Labour fought harder than anyone else to limit the outcome of the Smith Commission. Hence the limited powers available to the Scottish Government, which seems to suit Adam fine. Perhaps he wishes we didn’t have a Scottish Parliament.
It’s probably an embarrassment for him that Scotland is pro-EU and Labour’s famed Northern heartlands are not. Perhaps Labour should concentrate on turning that around.
I gather from their reactions when the Indie referendum was in the offing the neoliberals are petrified by the idea of an indie Scotland . Maybe encouraging that then is the quickest way to remove neoliberalism from these isles.
Independence is not a ‘dream’. Labour putting an end to neoliberalism almost certainly is a dream but we wouldn’t dream of patronising them with that description.
Ah, angry tribal politics at its best. You guys feel free to paint me with whatever prejudices you like on the basis I support Labour and don’t think Scottish Independence is possible under neoliberalism. Whatever.
If you can free Scotland from Westminster and strike out in a new progressive direction I’ll be one of the first at the border wanting to be let in!
I wish Corbyn would form an alliance with the SNP and the Greens for that matter. I wish a lot of things were totally different.
The UK political and media system isn’t fair or good and I’m just airing my opinion of the best practical way out of the mess we’re in. You may disagree with my means but I don’t disagree with your ends.
Scotland needs a progressive alliance….
I’m strongly in favour of a progressive alliance. I also think the SNP and Scottish Labour could both do with more new members pushing the parties in a progressive direction like we’re struggling to do in English Labour.
If I sounded peevish in my first post it’s because I, as an English progressive, feel abandoned to perpetual Conservative rule by the rise of the SNP. I’m not blaming the SNP, I agree Scottish Labour are neoliberal and haven’t helped themselves. I don’t blame Scots wanting to leave the UK.
So should we be putting more emphasis on land value tax on the meantime?
No harm done
Yes, we should.
Good to hear you talking about the unions again, Richard. I had feared your lock of reference to them implied some sort of schism, given your falling out with Corbyn and his close association with Unite.
Sometimes the left can seem an acrimonious place but good to see it isn’t in this case.
Do you have any union funded projects in the pipeline?
I have never fallen out with unions
I think some may have done with me, but that’s always what happens in life
I have no union funded projects coming but spent much of today in a meeting with the ETUI
Hi Richard, did you fall out with Corbyn as One Who Waits suggests? Given that you’ve stated often enough that you have no affilliation to Corbyn, Labour, or any other party (except pehaps Greens) this appears to suggest you had a working relationship that became unworkable.
It is well known that Corbyn used my ideas to be elected as leader of Labour
It is equally well known that I declined to work for Labour when asked to do so by them. John McDonnell proposed, in just about his first move as shadow chancellor, to sign up to George Osborne’s fiscal charter committing to balanced budgets. I would have nothing to do with that nonsense. McDonnell changed his mind, but I’d moved on.
But I was not a member of the Labour party and did not consider becoming one, as I made very clear at the time. The relationship was one of support for ideas that they had adopted. I am happy to do that with a number of parties.
Richard is disgracefully letting Sturgeon off the political hook because Sturgeon and every Scottish First Minster and Scottish government HAD AND HAS A CHOICE which was and is to DISAGREE with the fiscal framework offered by the UK Treasury and to FIGHT and to FIGHT again for a better fiscal framework with new powers to borrow £ billions a year more, interest-free, from the central bank, (be that from the Bank of England managing the Sterling £ or from a new Scottish central bank managing a new Scottish £ currency).
The Scottish Government has this page on its own website –
“The Agreement Between the Scottish Government and the United Kingdom Government on the Scottish Government’s fiscal framework
Friday, February 26, 2016”
http://www.gov.scot/Publications/2016/02/3623
and it is within the Scottish Parliament’s and Scottish government’s gift to amend this page to say THE SCOTTISH GOVERNMENT NOW DISAGREES WITH AND REPUDIATES THIS FORMER “Fiscal Framework Agreement”.
That’s entirely within the gift of the Scottish government. It is a matter of politics that Sturgeon chooses not to disagree with that agreement.
I am holding Sturgeon accountable for choosing to continue to agree with that rotten Sturgeon / Osborne fiscal framework deal which should, in the interests of the Scottish people, be disagreed.
Richard Murphy is giving Sturgeon a free pass for her sloppy and incompetent political leadership.
Therefore Common Weal should promote me to whatever standing Richard Murphy has with Common Weal.
I’m simply a better political economist than Richard Murphy is, by a Scottish country mile. (Not that his economics is poor, simply that his politics is poor.)
Peter Dow, Science and Politics
http://scot.tk
1) I have specifically said I think Scottish politicians should act in thus
2) my commentary is not arty political
3) Common Weal published a paper by me
Blame who you like for you don’t like but sure as heck I am not responsible for it
Richard, you were additionally quoted by Common Space, here
https://www.commonspace.scot/articles/11659/heres-how-scotland-reacting-new-programme-government
and I replied to their quote of your views here in a below-the-line comment there.
Then I thought it appropriate to give you an opportunity to respond by replying here too, which you have now done. Thanks Richard.
Since The Scottish Government promised not to vary the BASIC rate in their election pledges, taxes raised would need to be elsewhere. The 50p (or fill in the number that suits) HIGHER rate is one possible route, or land taxes or some other.
Your point about a central bank might be part of the answer too. Noting that a National Investment bank has just been announced and the idea well received, a Central Bank might not attract the howls of ‘separatism’ so much, and could lead more people to look at the proposal in terms of it’s benefits rather than just party political impact.
But if taxes ARE to rise where should the Scottish Government aim it’s net to actually harvest the additional tax take it needs whilst maintaining it’s promises to the electorate, or is that even possible?
Scotland cannot have a central bank whilst in the UK
The UK has a central bank already