Tax Justice Scotland has good ideas – here's how it must up its game

As I have long argued in this column and in the work that I have done with Scottish organisations, there is an urgent need for Scotland to have a tax system that truly meets its needs.

In that regard, the demands made by the campaign look, at first glance, to be appropriate. The reform of council taxation in Scotland – not least by the undertaking of a revaluation of properties to end the absurd anomalies that now exist – is a necessary precursor for any reform to local taxation in the country.

Scotland also needs a much more progressive tax system, and I would hope that Tax Justice Scotland will look at my Taxing Wealth Report 2024 (taxingwealth.uk) for ideas on how this can be delivered because there are plenty of suggestions in there on how this can be achieved.

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In particular, there are very good reasons for thinking that those with wealth in Scotland should make a bigger contribution to the taxation revenues of the country, on which point Tax Justice Scotland and I are in agreement.

That being said, I know that many of the organisations that have signed up to Tax Justice Scotland are also calling for the introduction of wealth taxes in the UK and around the world, and I would advise them to be extremely cautious about this when it comes to Scotland.

As a matter of pragmatic fact, wealth taxes are incredibly difficult and costly to administer because even if the owners of wealth can be identified, establishing the value of assets for taxation purposes is an intensely difficult, tortuous and dispute-laden activity. This very often means that however attractive a wealth tax might look to be in theory, in practice, the revenue that they raise tends to be quite low, especially in exchange for the effort involved.

That is precisely why I suggest that my Taxing Wealth Report might offer many much more cost-effective ways of collecting tax on the income, gain and profits of the wealthy – the majority of which will produce substantially higher tax revenue than any wealth tax could. Tax Justice Scotland does, therefore, need to do some serious thinking on this issue and demand things that can really deliver their goals.

Not all powers over tax are devolved to the Scottish parliamentI also have to express another couple of reservations about what Tax Justice Scotland appears to be saying. The first is the unrealistic nature of the demands that they have made given the current devolution settlement for Scotland. Except for the reform of local taxation in Scotland, what Tax Justice Scotland is demanding cannot be legally delivered by the Holyrood government as things stand.

In particular, all forms of taxation on wealth are outside their remit, as might be the majority of the useful taxes that could be described as “green”. Making demands to Scottish politicians for something that they cannot legally deliver simply sets up everyone to be both disappointed and frustrated.

In my experience, that is not a good basis for campaigning or for winning support from politicians.

In that case, Tax Justice Scotland should make clear – in a way that I cannot find on its website at present – that what the campaign group is demanding is predicated on the idea that Scotland will become an independent country, which is a process that they should say that they support. Unfortunately, their website does not make this at all clear, and that leaves me very confused as to what they are trying to do.

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There is a second problem with what they are saying. As several regular contributors to this newspaper have noted over the last decade, it is a straightforward economic fact that if Scotland becomes independent – which is a precondition of the delivery of the demands that Tax Justice Scotland has made being fulfilled – then presuming that independent Scotland had its own currency – which is a precondition of independence working – then that government in an independent Scotland would never be dependent on tax revenues to fund its activities.

It would instead always fund its activities with new money created on its behalf by the Scottish Central Reserve Bank. The bank would then manage that currency, with taxation then being necessary to reclaim the money that the independent Scottish Government would have spent into the Scottish economy.

There is no sign of any awareness of this reality on the Tax Justice Scotland website, which means that the demands that they are making might also be inappropriate for an independent Scotland.

I welcome any organisation, or organisations in this case, that want tax justice. However, making deliverable demands in a way that makes economic sense is a precondition of successful tax justice campaigning, and at present, I cannot see how Tax Justice Scotland is meeting these criteria.

I wish the group well, but I suggest it needs to up its game if it is to take the people of Scotland, the readers of this paper, and the independence movement with it – and it will need to do all three if it is to succeed.