As The National newspaper in Scotland reports this morning:
IN the fifth Scottish Independence Convention Transition Paper — Tax Policy For An Independent Scotland — political economist, chartered accountant and tax specialist Richard Murphy describes the steps Scotland will need to take during the independence transition period and after in order to set up a strong and fair tax system.
In a slightly annoying sequencing issue, the paper itself is not yet up on the Convention's website, but will be available here very soon.
This is the second occasion when I have written a lengthy paper (this one is over 6,000 words) on Scottish tax reform required to make sure independence works. The other was for Common Weal in 2017. I do see this new paper as building on the first, and it reflects both changes in my thinking and in attitudes towards independence since that time.
The paper's logic is reflected in two quotes pulled out in The National article, in which I say:
If Scotland is to have a modern, functioning, controlled and effective economy then having a strong, upheld, respected and enforced tax system is critical. Only a strong and fair tax system can ensure that a future independent government will be able to effectively deliver its chosen policies.
If Scotland is to be independent it will be a very different country to the UK, that it will have left and its tax system will need to change to reflect this fact.
My point is that tax is not a peripheral, or technical issue, which far too many politicians and economists treat it as being. It is in fact at the very core of government, policy and the economy.
There was a reason why I called my 2015 book The Joy of Tax. That reason was that I think tax the single most powerful instrument a government has to shape the economy for which it is responsible in the way that the people to whom it is accountable desire. That is, quite literally, The Joy of Tax.
The paper suggests that Scotland must embrace this logic. The need is not to just consider technical tweaks to tax, or to change a tax rate here or there, as devolution allows, but to ask what the values an independent Scotland wants to promote might be and to use the tax system to deliver on the answers.
Will the resulting tax system differ from that of the UK as a whole? I hope so. That's because I think Scotland would want very different values reflected in its tax system to those in the UK tax system now.
The UK tax system is biased to the interests of capital, property owning and speculation. It's my sense that this is not where Scotland is, or wants to be. I believe Scotland wants a tax system biased to people, jobs, the environment and the future.
Scotland also wants an accountable and transparent government not controlled by vested interests. That is a long way from where the UK is now, as is readily apparent.
So what I propose are radical reforms to deliver what I think Scotland might want.
The intention is to start a debate. It's a necessary debate on a subject too often ignored, and it goes right to the heart of what tax justice is really all about, which is designing tax systems fit for people and not just capital.
Comments will be welcome. I will be focussing in particular recommendations over coming days. And, of course the issues extend far beyond Scotland.
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Hi Richard,
As someone who probably benefits from the UKs tax system at present I nevertheless do agree that a fairer more egalitarian system needs to be in place.
My concern would be how to get over the potential “shock” of change to those who will “lose out” in any of those changes.
Is it possible to change from one system to one that is dramatically different incrementally?
I would hope so
I think it is
Is there a tax system that can deal fairly, transparently and effectively with the online industries that house themselves in literally tax free havens after charging “management services” to their UK based companies so that there is so little left over to tax.
I see Amazon, “other tax avoiding companies are available”, have built up over £2.7 billion in losses all ready to offset any potential hint of paying a penny in tax.
I’ve heard proposals for a Land Value Tax mooted before and the argument seems appealing on the face of it; to reduce the hoarding of under-developed land and, to an extent, reverse the effects of the Clearances. What are your thoughts on that?
Useful, especially in Scotland. But not as transformative as many like to claim. It reduces tax to a technicality and it is not
I enthusiastically look forward to reading your paper Richard. Tax reform goes right to the heart, along with currency, of the intrinsic shift that an independent Scotland demands. Thank you for your amazing work which benefits all of Scotland.
The path must be clearly laid for the taxpayers and their accountants to follow.
I would like to see a clearly defined set of tax rules for income earners, savers, corporates and charities.
Starting from scratch the arcane hundreds if not thousands of pages of U.K. Tax (anyone know?) should be reduced for modern day reality.
With that constructed, actual real world data should be used to determine what taxes would be liable and by which entities.
Of course accountants and lawyers will huff and puff but they shouldn’t- think of all that new work and fees!
A simple matter than of comparing with & showing the current system for the wrecking ball it is – especially against the poorest with indirect taxation, including the Lottery scam (idiots tax) into that.
Put these tax gaps into sharp relief, having lit them up with the pathfinders- bombs away!
[…] comes from my paper on a future tax system for Scotland, but since it explains why HM Revenue & Customs does not provide a model for that system it […]
The report is now available and I like it.
The report in the series on banking mentions Credit Unions and the fact that they can only lend money deposited with them rather than create it.
This bring us back to the issue of Seigneurage – the power to create money and the explosion in house prices caused in part by the banks who can create money moving in to the mortgage business unlike the building societies who cant (or could not in the past) create it.
So do we need more ‘non money creating’ institutions or finance in some areas eg mortgages and consumer finance limited to ‘non money creating’ lenders?
Perhaps these lenders should have access to Government created money when needed?