THE questions on the Scottish economy have not stopped because of a little local bother in one small part of it. That’s good news: we need to keep our eyes on the big issues right now.
Gordon Patterson is, albeit in his case within the context of the current devolution settlement. He has asked: "Is there any form of taxation that Scotland can develop under current powers that might be helpful, eg land rents? And even if we could, would the complications of interaction with current systems that we cannot control because Westminster does be too negative for it to be worthwhile?"
I think this an excellent question, and the type of issue on which the SNP and others in or aspiring to power in Holyrood should be focusing on at present.
READ MORE: Ask Richard Murphy ANYTHING about an independent Scotland's economy
This is a question where Revenue Scotland can help provide an answer. They say on their website: "There are a number of key pieces of UK and Scottish Parliament legislation that provide the framework for Scotland's devolved taxes and Revenue Scotland.
"The Scotland Act 2012 provided the Scottish Parliament with powers to levy two new taxes in Scotland: (i) to replace UK Stamp Duty Land Tax and (ii) to replace UK Landfill Tax."
Both of these have happened. They also add that: "The Scotland Act 2012 also provided the Scottish Parliament with powers to set a Scottish Rate of Income Tax (SRIT)."
What they do not say is that this power is very restricted, does not apply to all income and it cannot be changed to alter allowances and reliefs.
Also not noted by Revenue Scotland is the fact that the Scotland Act 2016 included powers in relation to an Air Departure Tax and an Aggregates Levy, both of which are of little overall tax consequence.
Finally, they did not note that local taxes are, of course, different in Scotland to the rest of the UK. However, the scope for change is also small.
So, in the context of Gordon’s questions the following note from Revenue Scotland is more relevant: "The Scotland Act also provided powers for the Scottish Parliament to bring forward new taxes (such as on activities currently not taxed under the UK tax code) where it has secured the prior consent of the UK Parliament."
In other words, Scotland could develop new taxes so long as they differ from existing taxes. Such taxes might include a wealth tax or a land value tax distinct from local authority charges, maybe payable by larger estates. The problem is, however, in the sting in the tail. Scotland can only do this with the permission of the Westminster Parliament.
Current precedents suggest that the Westminster Parliament is not too inclined to support Scottish initiatives. I see little or no prospect of this changing if Labour get into power in Westminster. The centralist control-freakery of Starmer and his coterie suggest it very unlikely that any request for new taxing powers in Scotland would be agreed. I even think that would true if, by some remote chance, Labour returned to power in Holyrood.
So what does this imply? There are two options. One has been the SNP way to date, which is quiet acquiescence with this control from Westminster. When the recently departed SNP leadership was heavily involved in agreeing the devolution settlement that was, perhaps, inevitable.
The alternative is for the Holyrood Parliament to propose the taxes it thinks are required for Scotland, whether or not Westminster approves, and to seek confrontation on this issue. This would be my preferred route.
The reason for choosing this strategy is obvious. We know there is too little government spending in Scotland. Under the devolved settlement more spending can only come from more revenue. The consequence is that the Scottish Government needs to show it could raise that revenue but is being denied the chance to do so by a Westminster government that is as a result imposing austerity on Scotland.
If, as now seems to be the case, an era of confrontation between Scotland and Westminster is on the cards putting tax at the forefront of this dispute would make a lot of sense. But will the politicians in Holyrood have the courage to do that? I do not know and wish that I was confident that they will.
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