I READ your article (Indy Scotland should undertake a tax revolution, The National, August 30) with interest.

I certainly agree that an independent Scotland should have its own currency, even if linked to sterling or a basket of currencies initially to provide early stability, but I was persuaded by little else other than the need to radically overhaul the tax system.

While not stated in the article, I am sure that the author would also agree that taxation is not a “stand-alone” issue, it must be considered hand in hand with effective management of the country’s resources and the requirement to not just fund government and social and other policies but also to provide the incentive to create wealth and foster world-class competitiveness in areas where Scotland has an in-built advantage – e.g. renewable energy, financial services, tourism, food and drink, oil industry services, software, etc.

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And if not an incentive, the tax policy and system should at least not destroy or reduce such motivation.

I don’t agree that Scotland needs a new ministry to oversee taxation. First, lean government should be an overriding objective and building a many-headed expensive monster is not the way to do this; second, tax policy is too integrated with general economic and financial matters to separate in this way.

I also would like to hear less about tinkering with this tax or that tax, less about increasing complexity and, instead, more about radically simplifying and slimming down the tax code.

While a properly designed wealth tax can have merits as a replacement for taxes on various kinds of income, a wealth tax in addition to taxes on income (whether employment, business profits or investment related) is a double taxation just like death taxes, adds unnecessary complexity and is simply unfair to those who have already paid taxes on earned income to create that wealth.

Taxation of savings, pensions, etc., likewise destroys the incentive to create wealth and removes capital from the system, needed to fund investment that in turn creates wealth for society.

Regarding the stated objective of tackling tax avoidance, the simpler the system, the easier it will be to tackle tax avoidance. It is the very complexity of the tax code that creates the loopholes that accountants exploit.

I would like to see a society where inequality is reduced. I foresee increasing social disruption if this does not happen so it is in everyone’s long-term interest that this does happen. (Reducing unjustifiable, unearned extreme public company CEO pay would be a good start.)

I also agree that we should provide a safety net for all Scotland’s people and support policies that improve the well-being of the people. However, wealth must be generated to deliver such policies.

If an entrepreneur creates and/or builds a company, creates employment and generates profits and tax receipts where none existed before, all Scots should rejoice. Scotland’s tax system must not jeopardise this outcome and, ideally, should motivate the entrepreneur to work harder.

I consequently have difficulty with the desire for a higher marginal tax rate and for changes to the system that do not reduce complexity or increase the double or triple taxation on earnings. It flies in the face of a primary objective to provide incentives to build Scotland’s wealth or, at the very least, avoid destruction of the motivation to create wealth unless there are countervailing advantages to living and working in Scotland.

I welcome the fact that people are thinking about this topic. But there appears to be a need for much more thought.
David Cairns MBA, FCMA
Finavon