A comment on this blog has made me look at a key issue for the people of Scotland post independence. This is the impact of VAT on the cost of living in Scotland if there is a Yes vote this week.
The summary of the story that follows is that if Scotland votes for independence and then applies for EU membership (as seems to be the plan at page 216, here) then the people of Scotland need to be braced for a shock because as a matter of fact VAT at a rate of at least 5% will need to be charged on such basic things as food, water and health care (if paid for). In fairness, VAT on some things (like the cost of entertainment) could fall, but that's hardly likely to impact on people's cost of living as much as VAT on food at a rate of at least 5% would do. As a matter of fact then when food retailers say the cost of living in an independent Scotland will increase I think they are telling what seems like an inevitable truth.
My starting point for this exercise was to look at what the Scottish government said on VAT in its white paper on the future of Scotland. It helps that there aren't many, so I can reproduce the few significant ones that there are. The first is this, which implies Scotland would have some control over its future tax rates:
Then there is this explicit reference in the Q&A section:
There is no mention made of any change to VAT rates in the answer provided. Nor is there in this next, rather specific, question on an issue which, along with airline passenger duty and its interaction with VAT, appears to be of some significance in the White Paper:
It has to be said that the second part of this answer is, with regard to VAT, in my opinion straightforwardly wrong. VAT is an EU regulated tax, and it is simply not possible for Scotland to claim that it would have control over VAT rates in the event that it applies for EU membership because VAT rates are now quite strictly regulated within member states. This is especially true for new member states, as Scotland will be.
The rules, as in most things relating to the EU, are included in Directive, in this case Council Directive 2006/112/EC of 28 November 2006. This is a hefty document of 118 pages, and has to be reflected in the domestic law of member states barring the fact that some member states are granted exemptions (derogations in EU language) for tax rates and allowances agreed before the current regulations came into effect. This includes the existence of the UK's zero rate of VAT, including on food. There is, however, no provision to transfer this derogation. It will lapse if Scotland leaves the UK.
In that case the basic requirement of this Directive is stated in Article 29, which says that the lowest standard rate of VAT allowed in a member state is 15%.
Article 98 then allows any member state to have up to two reduced rates of VAT that can be applied to a range of goods and services specified in Annex III (reproduced at the end of this blog). Food is on the list of reduced rate items, but there's a sting in the tale because Article 99 says:
The reduced rates shall be fixed as a percentage of the taxable amount, which may not be less than 5%
There is no way that Scotland will be able to get round this: this is EU law and I do not think there is any way that it will be varied for Scotland. So, as I said at the outset, Scottish people will, as a matter of fact, see the price of a great many of their foodstuffs increase by at least 5% in an independent Scotland if, as expected, it applied to join the EU. Unfortunately the Scottish government white paper on this issue does not make this clear. That's why I have done so here because the fact is that an important issue in the Scottish independence debate has not been discussed. There are a couple of days left where it should, I think, be on the agenda.
I stress: that discussion need not be negative: the VAT that would have to be charged. Based on HMRC data I estimate that the tax in question would raise about £300 million or about £1 per person per week in Scotland. Being more precise is not possible. The question in that case is not whether or how the tax in question would happen, because I think that inevitable, but how the money raised will be used. If this was used for redistribution purposes e.g. to increase benefits, to abolish the bedroom tax and to increase pensions, then, as is Scandinavia (where such taxes are charged), this could be redistributive to the positive benefit of those hardest hit. This then could be a clear message for many in Scotland about how a new society could be built. But what is not possible is to ignore this issue. As a matter of fact it is one that has , I think, to be addressed.
Finally, this is the list of items to which reduced VAT rates may apply in EU law:
NB: Updated for notes on cost impact 05.30 15.9.14
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
I suppose freedom of speech means that no-one can or ought to curtail discussion of this matter. But why now? The BT camp have had over 2 years to make this argument and have failed. Food retailers have been mentioning transport costs but not VAT. Why has Nigel Farage or Dan Hannan not pointed this out? Would this AnonHMRC Officer (is that right?) please tell us how long he’s known of this aspect of tax and if it’s a matter of general knowledge in his dept.? And as a known tax expert Richard could you provide some balance to explain whether a Scottish govt. in an indyScotland could offset this tax by reductions elsewhere so that any rise is cost-neutral to your average Scot?
I suppose it only right to point out that the UK govt. helped its citizenry weather the 2007-12 recession by raising VAT to 20% when it explicitly said it had no plans to do this before the election. So could Scotland as a new state lower the general rate to 15% (perhaps in reality one should say not lowered but introduced)?
Sadly I have no doubt all of this will be picked up and amplified between now and Thursday. I personally would appreciate it if you could model something so that this doesn’t become a stick with which to beat some sincere progressive people (and some very easily frightened older people as well).
Better Together have been saying for quite some time that Scotland will not inherit the UK’s existing exemptions and opt-outs from the EU on a whole range of issues, including the zero rating – not just on food, but on children’s clothes etc.
Its been consistently dismissed as scaremongering.
I don’t think it is scaremongering
I think it’s fact to be faced
A consequence of rUK claiming successor state status (which will be disputed in Scotland anyway) is that the terms of Scotland’s EU membership is in the gift of rUK. It could easily (but of course not necessarily) be the case that these terms are a continuation of the existing status quo for Scotland i.e. no VAT on food. If the rUK plays funny buggers on things like this (which are essentially zero cost to it) then that’s the sort of issue that will lead to negotiations breaking down and Scotland refusing to pay its share of the UK debt.
I fully expect rUK to tell the rest of the EU, before the date that Scotland becomes independent, that Scotland is acceeding to the EU with a share of the opt-outs and responsibilities of the current UK. Other EU members will notice no diffference, and welcome Scotland as a net contributor to EU budget, with no precedent set for their own seccessionist regions because of rUK agreement.
So this is not a “fact to be faced”, it is a scenario based on rUK taking a particular negiotating stance. The UK government have the incentive before Thursday to say that such a stance is likely, i.e. they have the incentive to “scaremonger”
I have to say I simply can’t read it that way
I don’t think anyone gifts the UK anything in the EU and I do think the Commission will notice
Any other position is optimistic, at best
Dcomerf
There is no way the EU is going to let Scotland join on easy terms. Many countries of europe have their own regions wanting to secede. By imposing harsh terms on Scotland the other EU nations will hope to head off their own sucessionists. In essence saying you can leave but expect to pay a heavy price if you do.
Is this a legitimate way for them to act? Maybe not but it’s exactly what they will do.
You like most pro-independance Scots seem to have their head in the sand over this.
I agree with you
Spain is going to play hardball – maybe very hard ball indeed
I think the idea that Spain will block EU membership for Scotland is mere wishful thinking on the part of the unionists. There is no sense in doing so and there is no reason of realpolitik either. Spain has made it plain that this is a matter for the UK: and that is in line with their view that the situation in Catalonia is a matter for Spain and its very different constitution. Nor is Spain going to want to lose the rights and advantages of access to Scottish fish. I do not think that they will be stupid enough to imagine that Catalonians who are supporting independence will be cowed if Spain blocks Scottish accession: it is more likely to harden opinion and the Spanish are not stupid. The same goes for other countries with independence movements.
We cannot be certain how those countries will weigh their interest: but we can be absolutely sure they will weigh their interests and not those of the rUK as it perceives them.
It is quite a feature of this referendum that a great many appear to assume that the way they see the world is the only way to see it: this is one example of that
OK: we differ on who is doing the wishful thinking
And Spain is far from alone on this
I’m not being critical of you I should make clear for the above blogpost.
Worth noting that healthcare is exempt: see Article 132. But otherwise analysis looks sound to me. Great leak – and clever of you to identify significance
Healthcare is: pharma, which is what more people might pay for, is not
Point taken
I think that this has probably not been mentioned before as it is a somewhat arcane and technical part of EU legislation – but as Richard shows above it is all in the public domain in the EU directives for anyone to read, also as he notes the UK obtained derogations when we joined the EU in the 1970’s, so it may be that an independent Scotland could try to negotiate its own derogations, but as far as I know none of the recent new EU member states have been allowed to exempt food from the lower VAT rate, indeed I think that even Switzerland, which is not in the EU, has a low rate of VAT on food and passenger transport. I think Richard has covered the point about the standard rate being no lower than 15%,so Scotland could presumably have a standard rate of 15% which would reduce prices on a lot of other goods and services.So there is a certain flexibility in rates allowed by the EU, but not in the scope and coverage of VAT for new members
Agreed
I should say I know pretty much nothing about EU tax law! I was surprised to find that “zero-rated” and “exempt” are different categories!
After looking around a little, I did notice that Malta (became a member in 2004) and Ireland are the only other nations with foodstuffs zero-rated. Could anyone explain why Malta and Ireland and the UK are special in that regard?
Exempt and zero rate are very different in EU and VAT law
The UK, Ireland and Malta all got zero rates before 2006 and so can keep their derogations
The 2006 Directive does not appear to provide ready scope for more on a widespread basis. Exceptions are made, but they are limited. It’s wise to assume there would be none on this issue, which is my point
Totally agreed
Agreed
There are three potential outcomes concerning VAT:
1. Scotland is not in the EU and has to apply to get back in. Result, keeps zero rates for the time being but loses them on accession
2. Admitted immediately to EU but denied the held over zero rates deemed only to be exercisable by the remaining UK.
3. Treated as a partition of the UK and thus equally entitled to retain held over zero rates.
In my view, the only logical answer is 3, and EU taking a contrary view is a form of sabotage. But I cannot deny that they might, since the EU is famed for destructive policy making.
No one has a known mechanism for (3) so I dismiss it as viable
I could be won’t but I seriously doubt it. Why should other new states agree?
> No one has a known mechanism for (3) so I dismiss it as viable
Would it be true to say that no-one has needed one until now? I’m guessing Scotland’s post-Yes situation would be unique in EU history, though I don’t know for sure.
In that case, while I don’t think you could rely on special arrangements, I think it would be unwise to rule them out. Practically, a lot would depend on sentiment and political positions in respect of a negotiated membership I think. With such a complex entity I personally wouldn’t venture to make hard predictions about any outcomes at this stage!
No one has tried to do what Scotland will be doing
Everyone else will have been through a long courtship
That suggests to me there will be fewer negotiations, not more
Why do you say there is no mechanism for (3)? There is no mechanism for expelling Scotland either because this is not a situation which has arisen before. Why would the other states not agree, since that is the smoothest transition, pragmatically speaking.
I also don’t see why you state that the countries mentioned could keep zero rates because they had them before 2006. I could not read the whole document (couldn’t find the annexes online) but I did not see anything in the document which provided for that concession: only for things before 1978, when those countries were not mentioned.
I am sure I have missed the provision so can you point me in the right direction, please
The provision re (3) is based on precedents in international law
The arrangements re derogations are fiendlishly hard to find and having closed the links I was using late last night am not going back
But that’s the deal
Can’t agree that is the position in international law. Westminster’s own commissioned paper on the issue (by Crawford and someone whose name escapes me) makes it plain that there is no certainty at all about who will be a continuator state and who a successor, in international law: though the spin is naturally different.
Nor does the position wrt to continuator etc state status directly determine the EU’s decision.
We differ
That’s life
Neither if us may be right
With respect, this learned commentator seems to strongly disagree…
http://notesfromnorthbritain.wordpress.com/2014/08/29/scotland-and-the-eu/
And as the article points out, even M’Learned Friends in the Yes camp concede that Scotland will not get anything without giving up things in return – especially as some states will be very harsh about what is on offer to Scotland.
It is, of course, possible that the EU would effect a change to the Directive as part of accession negotiations. But absent a change, it’s not open to serious debate (as I see it) but that there would be VAT on food (and other categories currently zero rated) in the UK.
Jolyon
It’s possible they could agree a change
But candidly, I think it’s unlikely
This is core EU policy
Richard
That’s my political instinct too. I suppose it’s important, in such a charged area, to try and be clear about the difference between legal judgements – i.e. under the law as it stands an independent Scotland would have to charge VAT on food (and water) at a rate of at least 5% – and political ones: would the rest of the EU agree to change the law (in a manner that distorted the operation of the single market) in accession negotiations with Scotland.
Jolyon
The possibility of change always exists
But I can’t see why it would in this case
But that is judgement, based on the law as it is being a fair reflection of what the countries being asked to make the change do think
Richard
http://www.accountingweb.co.uk/article/europe-wants-end-uks-vat-breaks/560440
Looks like there is pressure to apply at least the 5% rate to rUK as well. Course the derogation might be retained as it is only a recommendation. But as this article has pointed out the UK has endorsed that recommendation.
Any thoughts on that?
I think the UK will keep the derogation for now
Forever? Who knows….
@ Jolyon Maugham
How could they put VAT on water in Scotland? Water is not privatised here and as I read it public service is exempt. Have I misunderstood that too?
State services can carry VAT
Transactions which Member States may continue to exempt
(8) the supply of water by a body governed by public law;
From your own link.
‘may’
Yes, “may”. As in “can if they want”
Give this up Mr Murphy. Your research is normally much better than this and while I understand that the narrative from unionists is full of misinformation and faux certainty one of the things they insult us with is the notion we have taken no trouble to look into the problems at all. Most of us are aware of some of the problems we will face, and aware that problems will arise we have not thought of. But you are presenting much of this as fact, and it is not.
A professor of law at Oxford and a tax barrister reckon I am right
I think I am as close as can be
What this VAT issue boils down to is the same as with the Currency Union issue – everything revolves around a rUK Westminster in the event of a Yes vote being prepared to negotiate on the basis of goodwill and the best interests of all people across the ‘old’ and the ‘new ‘UK’. Given the deplorable behaviour of the Westminster Parties in cahoots with big corporate interests (including the banks!) to ‘warn’ and at times threaten the Scottish electorate, might suggest that to assume a reasonable and rational Westminster might indeed be a difficult call.
BTW it has been dismaying to see how readily and culpably the Labour Party has lined up with these corporate interests and the Orwellian propaganda pouring out in the latter panic-afflicted days of the referendum. If the No campaign does win it will be on a basis that does not bode well for the subsequent political health of the UK. I fear for Labour in Scotland that, regardless of the referendum result, many erstwhile tribal Labour voters will not forget this period. It could be a terrible irony that Labour’s conduct in Scotland on the referendum may make another Tory/Tory alliance UK Govt that bit more likely – something that would be positively bad for the bulk of the all UK population.
My concern is with the truth here
I am not enamoured of the No campaign or neoliberalism
But the Yes campaign has also misled on this issue
Nothing has done well as a result
And the Yes campaign has not been good on tax – most especially corporation tax, where it is signalling a race to the bottom
Richard I would hope that the accepted concern of us all here is with the truth.
IMO the neo-liberalism isn’t just a matter of the No campaign (appreciate you are not saying that) – the entire Westminster system has long ago gone over to neo-liberalism. I can’t see where the driver for a *fundamental* change away from that will come from in an existing UK. The power of the big corporate interests in the indyref campaign I referred to are a harbinger of what will happen to any real attempts at change in the existing UK. Indeed, again as I pointed, Labour has readily and culpably played with the corporate interests in this matter (and of course there as re many worrying aspects of the Blair Government in the same context).
Agreed that neither side in th4e indyref debate have conducted some aspects well – and agreed that Yes has not done especially well on tax. But there again, the UK’s position on tax is deplorable, the nearest we seem to have got to any kind of addressing the big corporates tax avoidance is one or two MPs grandstanding at Select Committees. And again referring back to Blair’s Government, Chancellor Brown did not have a good record when it came to tax havens (despite much rhetoric). Moreover, if neither side has performed well then surely the bulk of the blame lies with Westminster? The referendum was called (indeed rather forced on) under their rules and timescales. The No campaign has the overwhelming Establishment, Government (including some dubious roles on the part of the Civil Service) and Big Business tribes on their side – and yet they can do little more than come up with a ‘Project Fear’ baggage train?
Incidentally, anyone who has any doubt on that latter point need only look at for example, the mocking demeaning, caricature of a cartoon in the current edition of the online Economist to maybe wonder what other sector of the UK population would be portrayed in such a way. This crude stereotyping of ‘the Scots’ has not been just a matter of the red-top press; the FT has been especially notable in its fall from its usual editorial standards on the matter. Prospect seems to have been running almost as an in-house No team member. As for the BBC… well their performance on the referendum must be a matter of serious concern to those of us who see the continued existence of the BBC as a reputable objective public broadcaster.
I don’t dispute any of that
We need to transform politics
It is not at all clear the SNP is
Like many people you are confusing SNP policy with the Yes campaign: I wish people wouldn’t do that.
The SNP do want to cut corporation tax: just like the Labour party did and for the same perceived benefits. However you state that will result in a “race to the bottom” and there is no reason to accept that at all. Why should that be the outcome when it is not what happens elsewhere, at least not automatically. It seems to me that is predicated on a belief that nothing else would change in terms of tax and fiscal policy: and I am not voting yes in order to continue the current economic policy in the future: I sincerely hope there will be radical change in content and in aims.
I think that this article from Wings is instructive wrt to the assumption of a race to the bottom.
http://wingsoverscotland.com/the-race-thats-never-run/
I do not confuse SNP with Yes, in fact I have said Yes but lead to a rejection of Salmond – why vote for him any more?
The article is crass nonsense: tax rates are irrelevant. It is effective tax rates that matter. Headline in Luxembourg is arounf 29% actual 1% or so. Same in Ireland. The article ignored that and just revealed the writer’s ignorance as a result
If you are founding on a “race to the bottom” tax rates are far from irrelevant, in the context of the SNP’s policy: because that is what is being attacked. As you say, and I have also stated, it is the whole picture which matters. But you did not say that at first: just repeated the “race to the bottom” nonsense so familiar from unionist propaganda. You can do a lot better than this, Mr Murphy.
I think I can reasonably claim to know more about the race to the bottom than most
In my professional opinion it is a race to the bottom that is being signalled
And I rather resent being called a Unionist when I am by choice an Irish citizen
I am not suggesting you are a unionist, Mr Murphy. I am suggesting you are repeating many of their positions rather uncritically. It is obvious that many who support the labour party hate the SNP and Mr Salmond, and it blinds them to some extent. I did not think that was a feature of labour supporters in england, but it may influence their outlook to some extent and perhaps that has happened to you? That, of course, is mere speculation. But though you say you make the distinction between the SNP and the yes campaign you have conflated them more than once in this thread and that is very familiar to those of us in Scotland.
As I have already stated, I consider that Mr Salmond and his party are closer to the kind of position we got during the period of the post war consensus than any other in the UK with any prospect of forming a government. But he is a product of his time and his training and it would be astonishing if he did not accept some of the neoliberal prescriptions which are so pervasive. That is true of virtually every mainstream politician in the UK and so does not work to justify special criticism of Mr Salmond. In office his party have done good things which the labour party had the opportunity to do, but did not. We in Scotland can see the difference. Labour are neoliberals through and through and there is no vestige left of any kind of compromise nor any kind of defence against the hellish austerity agenda the tories and lib dems also promote. Watch what they do. The difference is clear. Mr Salmond is a better bet than any possible alternative on current showing. Ms Sturgeon is also impressive but your suggestion that she should take over is not based on any reasoned analysis at all. As it happens I think that is what will happen at some point: but not because there is anything particularly wrong with Mr Salmond: he has done a good job in Scotland and for Scotland. Can you say the same of Mr Milliband, in and for the labour party? Cameron, in and for the UK? Clegg, in and for himself, even? I don’t think so
I am not a member if the Labour Party
That is another assumption you have wrong
Edward: with respect, it’s nothing to do with rUK. Changes to the Principal VAT Directive are not within the gift of rUK. It’s, from memory at least, a qualified majority voting matter for the entirety of the EU.
You are right Jolyon
And no one will listen to rUK, I suspect
Jolyon, with respect, your entirely missing my point – it’s to do with the interface between Westminster & a post yes Scotland and negotiations on continued/renewed indie Scotland membership of the EU. Westminster’s attitude and actions will be crucial.
Edward, whole hearted agreement to the thrust of your statement with one qualification. The BBC has, for several years now, been at the heart of a media trend that routinely lambasts and lampoons the English working classes, joining the press in the creation of a grotesque conflated caricature of ‘working classness’.
This, together with a willingness to parrot Government hype as fact has long since removed (for many of us at least) any semblance of the BBC as a fair and respectable broadcaster.
The long arm of Neo-liberalism extends way beyond the confines of Parliament.
Have refreshed my memory and an amendment to VAT Directive – to permit zero rating of food and water – would need to be unanimously agreed by all Member States: see eg http://www.parliament.uk/briefing-papers/sn02683.pdf
That’s not likely then
Note that any amendment to VAT Directives has to be agreed unanimously. QMV doesn’t apply to tax. There have been a number of attempts to change this, and the UK has always resisted.
Those who think that Scotland will simply inherit the UK’s EU membership are deluded – even the “yes” campaign has conceded this can’t be achieved without treaty amendments. This would require unanimity, ratification by each member state, and also trigger referendum requirements in a number of countries… so not exactly a fast process. Much more likely is that the full accession process would have to be gone through – a couple of years of negotiations, followed by 18 months or more of ratification procedures in each country.
I love the first comment above, grudgingly admitting that freedom of speech permits Richard to make this point. How very generous.
who says we have to join EEC there will have to be an election after yes vote that is the whole point of independence we will decide
You don’t have to
All parties seem to be saying they would want to
As an Englishman I broadly laud the Scots’ desire for self-determination, and wish them well in the event that they choose to leave the Union. One thing that stands out is their desire for a fairer society which many Scottish people now seem to believe they will never achieve as a ‘junior partner’ in the ‘United’ Kingdom. I personally feel that the Labour Party, more than the Tories, had it within their power to save the Union, but, in failing to present a clear and unambiguous vision for the future, did not. One possible positive consequence of a ‘yes’ vote will be that the Labour Party both sides of the Border will need to think very hard about who they are and what they stand for if they are ever to stand a chance of winning an election again. Scots have steadfastly returned Labour MP’s to Westminster again and again, only to see those same members denied or co-opted by the Neo-liberal concensus. If Scotland does say yes it will have more to do with a desire for social justice than the (oft remarked)resentment of the English. It is a pity that Labour’s unequivocal opposition to independence has made Mr Salmond (a man less likely to deliver the necessary rebalancing of the economy) the heir apparent to the seat of power in a new Scottish Parliament. It is sad also that the preoccupation with fiscal union has been allowed to drown out other vital aspects of the debate. Scotland is possessed of vast natural resources beyond oil (including the potential of renewable energy sources, much of which currently rest in the hands of the landed nobility that own much of the country). A potential rebalancing of the economy would require those resources to be rendered into the hands of the Nation, but would potentially far outweigh the negative of 5% VAT on food.
As for European regulations I would suggest that the increasingly likely prospect that Marine Le Penn is returned as the next French President casts a deep shadow over the future existence of the European Union itself. I think the Scots have more pressing and immediate issues to address.
Martin
So much merit in what you say, most passed by during the referendum debate
And the far right not just a threat in France, although massive there
Richard
Martin-I couldn’t agree more; this is yet another example of a Labour party utterly neglecting its own constituency and failing to rise to any occasion.
The trio of leaders looked utter disgraceful and shambolic as they scuttled to Scotland and probably did more than the SNP to discredit Westminster as a functioning seat of democracy. never before have party leaders seemed so much like glove puppets.
So much of what is permitted to happen is due to Labours utter fecklessness. In fact-I can no longer find printable words to express my disgust with them.
I am surprised this VAT issue has not been highlighted by the BT campaign (I even emailed them last week pointing it out….).
Pretty straightforward if Scotland wants to be in the EU. A minimum of 5% on certain food, children’s clothes, public transport, books and other publications, new housing….
Agreed
I’m not surprised Better Together have missed the opportunity to make this VAT point as their campaign has been absolutely terrible. If Scotland does vote yes a lot of the credit for it has to be because BT were so crap – I wonder if many of the Tories secretly wanted to lose? Makes it easier for them to win in rUK after separation, after all.
Was it just February this year that senor barrosso said Scotland could find it impossible to join the eu?
Several countries seem to be able to sup with a long spoon when it comes to the Eu.
Why not us?
As I see the current European set up as profoundly anti democratic and wilfully destructive, I can contain my enthusiasm for membership for an indefinite period.
I have massive EU reservations
I am commenting on what is actually happening, as I see it
Ciaran
Joining the EU may be a longer process than is being estimated
the last member of the EU to join Croatia took 10 years.
With a unanimous vote required some member countries such as Spain
and Belgium who have there own issues with nationalism may not
vote to allow Scotland to join.
This VAT issue has been in the wind for quite some time. I am surprised it has not received more attention before now.
Correct me if I am wrong, but don’t those in favour of Scottish independence say that Scotland’s continued membership of the EU (Graham’s option 3 above) depends on an amendment to the Lisbon treaty under article 48, rather than accession under article 49? That mechanism requires ratification of the amendments by every member state. Even if rUK wanted to deliver it, it is not in its gift.
(Incidentally, the research is rather equivocal on whether the zero rate for food actually makes prices any cheaper for consumers, rather than just increasing profits for businesses. The zero rate for food is ridiculously overcomplicated anyway, and a throwback to purchase tax in the 1960s, but the “pasty tax” debacle shows the political difficulty of any reform.)
As others have noted: unanimity seems unlikely in the first instance
And yes VAT zero rating is complicated, but I think you can be sure some will be passed on
Even the Yes campaign doubt that Scotland can get entry to the EU via Art. 48.
Richard
I discovered this VAT issue a while ago when I started to do some research for clients on the tax aspects of separation (I was born and live in Edinburgh). I raise this very issue repeatedly in newspaper comments sections, but, guess what, I get accused of lying by the cyberNats – it’s truly pathetic.
And in fact it has already been pointed out by Better Together about 6 months ago.
http://www.bettertogether.net/blog/entry/eu-warns-of-separate-scotland-vat-bombshell
The problem is that the Yes side, instead of engaging with potential problems and, frankly, telling the truth, whenever a problem is raised, you are accused of Scaremongering or being part of the Westminster elite.
It simply isn’t a fair or honest way to run such an important campaign when for example the First Minister claims to have had legal advice on an issue and it turns out he has had nothing of the sort and in fact has incurred legal costs in an attempt to cover this up.
It’s not democracy when one side is lying through its teeth to get the ball over the line. I guess you can guess which way I’m voting 🙂
I admit to some surprise at the venom in the response I have got today
I am also surprised by the willingness to delude themselves so much that they cannot even see what are fairly raised issues
Try and remember that the ballot question is:
‘Should Scotland be an independent country?’
Not
‘Has every conceivable circumstance arising from being able to vote for your own government been adequately planned for and resolved in advance?
Also in Edinburgh and after 6 odd months of daily scare stories from all conventional media and the miserable tripartite coalition, l have a different view of who has been lying through their teeth.
There will be plenty of bumps in the road,but that’s life. I’m sure we can overcome them.
I would have no problem with the result of an open and fair contest, but I believe that if the vote is yes, I think a large proportion of that vote will have been won on the basis of lies, cover ups and evasion. I’m truly sorry that it will have come to underhand tactics to persuade voters to vote one way in defiance of the facts.
This is politics,the no side are hardly paragons of virtue,setting us all a good example.
The ‘facts’ are problems which will have to be addressed if we can vote for our own government.
I find it extraordinary that so many are able to predict the future with such certainty.
France might be out of the EU if hollande keeps doing such sterling work. The EU might be so desperate for members it might actually start listening to their populations.
I think it would be nice to be able to vote in a process where it counted.
I feel sorry for the no camp,as their vision of an independent Scotland is so unremittingly gloomy and their vision for a future in the union is non existent.
I know if were a BAES worker I’d be voting no….and also checking on the prices of housing etc in the South in the event of a Yes vote.
I would also add that a Yes victory will be good for the UK as a whole, if not for the unionist parties.
It will show that there are alternatives to an increasinly decadent status quo. The efforts of the radical independence campaign in boosting registration is a lesson to all.
The key constituency cartel in westminster seems content to let popular participation wither on the vine.
Apathy and fear is what works for them, not us.
Hang on, let’s not panic.
Adding 5% doesn’t need to mean that the less well off will be worse off. It simply means that the government will have extra revenue, and they can use that for progressive purposes.
I note that the 1% running the No campaign has not made a big issue of this. What does that tell us? True, the Yes campaign could be more upfront, but independence is big picture, while VAT is a minor detail.
The SNP have created a winning combination of Socialism, that is promoting the wider good under benevolent government, and Nationalism, that is self-determination. We should all be excited about the potential.
We in the downtrodden fUK will learn many lessons from across the border.
Jack
I mention the possibility of redistribution in the blog
But the idea that the SNP is socialist is just not true: any party that appears to be playing with cutting corporation tax to make tax haven Scotland does no fit that bill to me. I see only neoliberalism
I may be wrong, but dedication to the £, EU, Crown, financial services, low tax and more looks very non-socialist to me
I do not think that the SNP would claim to be socialist. That can only arise because the neoliberals have managed to make socialist into a boo word and people have forgotten what it means. What the SNP in government has done is to reinstate some parts of the post war consensus, with some measures which are far to the left of the current labour party. And the people like what they have done. Contrary to received wisdom the SNP have shown that if you stick to your manifesto you do not inevitably lose support half way through your term of office.
The SNP is led by Mr Salmond: he is not a one man band, to be sure, but he is an extremely influential man within that party. I would be very surprised if he does not set policy on many issues: and he is an economist who worked for a bank. His training and education will have persuaded him to accept the core assumptions of the neo classical analysis, just like most others from that background. Doesn’t make him right
We are not voting on the SNP manifesto on Thursday. If the vote is yes we will vote on party manifestos in the first general election after independence. I suspect the SNP will win that election but that depends on how quickly the other Scottish parties can reinvent themselves as electable within the parameters of the very different aspirations of the electorate in Scotland. The labour party, in particular, has very strong core support in Scotland, but have failed to defend the values that support is based on: without the need to woo the neoliberal in the rest of the UK they could return to their roots quite quickly, and a “post war consensus” tory party could do that too. Both of those parties have abandoned their voters: they can decide to do otherwise in Scotland if they want, and I think they will
But Chancellor-then-PM Brown’s record on tax and the big corporations (especially tax havens under UK jurisdiction) is distinctly unimpressive. What achievements were achieved under that Labour Government on inequality were arguably only possible awhile by throwing large dollops of public expenditure at it while the musical chairs of the unsustainable irresponsible financial wizardy boom-time held. Moreover, that Government did little (if anything) to fundamentally alter the ruling institutions, values and processes of ne-liberalism embedded in the UK. There’s little prospect of that changing in the existing UK.
I wrote an article on Brown saying that in 2007
I think the same now
That little bit of extra revenue will be swallowed up by the plans to cut corporation tax and the like.
Bad economics and wrong argument. SNP have made a reasonably persuasive case on anticipating an *increased* revenue from a *lower* corporation tax. But that’s not the point.
This never happens
There is no case
Ed Note
This commentator’s postings have rapidly reached the point of being abusive and are now being deleted automatically
The SNP is indeed far too timid and conventional, but they would have to be elected in an independent Scotland and that is not a given.
Who knows what the battle lines might be by the time that election occurs?
I would venture that a lot of fresh thinking will be called for in such a situation and they will have to address these questions.
A yes vote is a commitment to independence, not the SNP.
Given the shell shocked, moribund state of the unionist parties here, I think the greens and socialist parties might benefit and open up the policy space considerably.
Independence allows these possibilities, Union guarantees nothing but more of the same.Our devolved powers are privileges and I could see a Johnson/Farage (Or miliband/clegg) government hapily withdraw them.
I liked what Tommmy Sheridan said to Andrew Neil:
The only banks closing in scotland will be foodbanks
I hope Tommy us right
And I hope Nicola Sturgeon gets yo lead the SNP
Yes or No
“I liked what Tommmy Sheridan said to Andrew Neil:
The only banks closing in scotland will be foodbanks”
I admire your blind faith.
However, does it not seem rather counter-intuitive that without further measures by Government to negate it (which have not been explained anywhere by Yes), an increase in the cost of food (VAT and logistics costs etc) would lead to less need for food banks?
There’s nothing to admire, I am as clear sighted as the next person.
Unlike you ,however, given that we might not be in the EU for ten years, I don’t hyperventilte about policies which don’t apply now, might not in the future and not really as important as you wish them to be.
Whether a nation has food banks or not is an expression of its leaders’ political priorites.
I have approved this comment, reluctantly
I expect more respect between commentators than is sometimes afforded to me
It is true that whether or not a a nation has food banks or not is a reflection priorities but as a long time commentator here whose identity I know I suspect roger rabbit would agree with that
The EU – or rather EU member states – are going to give not a single concession to the Scots. Why would Spain et al. even wish to? It’s a rare event, but I’m in agreement with Mr. M…..the Scots are going to get nothing from the EU nor the rUK over this issue.
And if Private Eye is to be considered accurate – take yer pick – the Scots are going to get a shock when they come to sell expensive Green energy in to the rUK and expect the bill payers throughout the UK to subsidise ‘Scots Green Energy’.
Well perhaps they will make sensible accommodations with the Scots because:
1. It is in their interest to do so
2. It will annoy the UK (only kidding:I do not think this is going to come down to the infantile terms which have informed the predictions so far.)
EU member states will do what seems best for those states whatever that might be.
rUK? Not so certain about that because I think that people across the UK are fed up with their austerity agenda and it might be very handy to be able to blame the fresh round of it which is inevitably coming on those pesky scots.
The powers that be do not want the Union to dissolve. I would have thought self respecting Scot seeing the “crocodile tears” of David Cameron and hearing the “Siren” promises being made to Scotland should be running towards the polling booths now to vote “Yes”.
This on the “totally unbiased” reporting by the BBC makes interesting reading and viewing.
I think Scotland should vote “Yes” just because they have the opportunity to do better and a chance to escape the suffocating stench of coporatism emanating from Westminster!
Sorry the link is here:
http://www.ianfraser.org/how-the-bbc-muzzled-a-professor-who-exposed-its-impartiality/
Sorry rubbish editing
I think Scotland should vote “Yes” just because they will then have the opportunity to do better than the rest of the UK and a chance to escape the suffocating stench of corporatism emanating from Westminster and of course the City of the London.
That’s obviously potentially true
And my heart might still incline me to yes
That episode of the attempt to muzzle an academic unfortunately was a precursor to much of the BBC less-that-balanced-or-objective coverage of the indyref debates 9 don’t suspect crude conspiracy, just a London-centric culture and ineptness). Another, perhaps more significant, episode was the exposure of the UK Treasury supposedly impartial civil servants highly misleading and contentious estimates of the governance transition costs of going into an independent Scotland. The LSE did a thorough demolition job on those esitmates (was that demolition ever even reported in the mainstream London-centric UK media? The original Treasury figures were.. *If* I’m correct the LSE work was done by Prof Patrick Dunleavy
A newly independent Scotland, free from Trident, could always open negotiations with Mr Putin with a view to adopting the Rouble (underwritten by the Moscow Central Bank) and aligning with the Russian Federation.
I can’t see Vladimir objecting and I suspect a lot of the putative obstacles to EU membership would disappear overnight.
Just a thought…