Inquiry by the Scottish Parliament’s Economy, Energy and Tourism Committee into Scotland’s Economic Future Post-2014
Please find following my written evidence.
By way of background I am a partner in and co-founder of Legal Knowledge Scotland, immediate past Convener of the Scottish Borders Chamber of Commerce, a former trustee of Reform Scotland and co-author of its “Fiscal Powers” and “Devo plus” papers. I have written extensively on the fiscal powers debate and in particular on how we might create a simpler, more efficient and effective Scottish tax system.
I only wish to make three points to this inquiry.
Firstly, if Scotland votes ‘NO’ it will be extremely difficult to persuade Westminster to devolve any let alone substantial powers to the Scottish Parliament. For evidence of this simply consider what was proposed by the Calman Commission, the reaction to it by the then UK Labour and subsequent coalition governments and what was actually delivered by the Scotland Act 2012.
The chapter I wrote for the recent Hassan/Mitchell book: After Independence titled “The continuing battle for Scottish tax powers” outlines this argument in more detail. A link to this chapter can be found here.
Secondly, even if you are able to persuade Westminster to devolve even relatively minor powers it will be at least a decade before the Scottish Parliament can make use of these powers. In addition, it is likely that Westminster and other vested interests will use this time to water down any proposal. For evidence of this again note the Calman timeline. A link to an article I wrote on this issue can be found here.
My third point concerns the Scottish Government’s White Paper on independence. Three of the tax related priorities are: reduce Air Passenger Duty (APD) by 50%, set a “competitive” corporation tax rate and design a more efficient tax system.
Whilst I have no real issue with these priorities and in particular designing a more efficient Scottish tax system, I do feel that the Scottish Government is not being radical enough. Personally I would have argued for abolishing two or even three of the minor taxes such as stamp duty on shares, APD and possibly even CGT.
Why am I arguing for this? If we are serious about creating a simpler, more efficient and effective Scottish tax system we need to start removing some of the clutter. That is best done by abolition not tinkering. Does an independent Scotland need over 25 taxes, charges and duties? Of course not. Does Scotland need a separate Stamp Office, Registers of Scotland and Companies House? Of course not.
In addition consider for a moment how an announcement such as this would be perceived throughout Europe and also further afield. I suspect that the way Scotland is viewed by many may change or at least be reconsidered.
James Aitken, 26 January 2014
