Another week in “tax land”

Let’s start with the fiscal powers debate.

The fact that Douglas Alexander, shadow foreign secretary and Scottish Labour MP, has now entered the debate provides further evidence of a possible change in direction by the Labour party.  If you add to this the recent comments by Malcolm Chisholm MSP, former First Minister Henry McLeish and George Foulkes, former MP and MSP and presently a member of the House of Lords, something is clearly going on within the ranks of the Labour party.  Clearly plenty of opposition still exists but it seems that a number of senior figures are acknowledging that: arguing ‘the Scotland Bill and no further’ is not a realistic option.  The question is will Labour break the Calman consensus?

Now to England.  Research by the Local Government Chronicle has shown that up to a fifth of councils in England may not accept the UK Government’s offer to help pay for a freeze in council tax next year.  That is interesting as Scotland has had a council tax freeze for a number of years now. Although a number of councils have questioned this policy each council has in the end gone ahead and implemneted this policy.

That said this cannot go on forever.  At some point we will need to decide how we fund local government in Scotland.  The Scottish Government still favour a local income tax.  As I mentioned in a recent speech at Holyrood’s Scotland Bill conference this would now be possible under the proposals contained in the Scotland Bill.  Not that it is certain that the Scotland Bill will become the Scotland Act.  My speech can be found here.  Other options should include a Land Value Tax.  My preference is to allow councils some choice in the matter.  Some councils may prefer a form property tax over an income tax or possibly even both.

Now to the UK Chancellor’s Autumn Statement.  This takes place next Tuesday.  How much room to manoeuvre does he have?  Not much I suspect.  Recent debt and growth figures confirm that.  I cannot imagine him deviating from the view that reducing the national debt is his priority.  Although I have a fair bit of sympathy for that position it is equally clear that if the economy is to grow some additional investment or one or two targeted tax cuts is needed.  That is why I am hoping to see a reduction in VAT for home repairs and improvements as already happens in the Isle of Man.

What about the top rate of income tax?  The Eurozone crisis and in particular the possible introduction of a European financial transaction tax have pushed the 50p rate debate from the front pages.  I suspect this is only temporary and battle will soon commence again.  I do not expect to see any specific announcement on the 50p rate next week but I do expect to some comments along the lines of this needs to be looked at and how much if any revenue does it bring in.

I am sure we will see more anti-avoidance measures announced and possibly a consultation on a general anti-avoidance rule.

I will finish on an issue I wrote about a few weeks ago.  My earlier piece can be found here.  Ales Belyatski’s, one of the leading opponents of the Belarus government has been sentenced to four and a half years in jail.  He had been charged with tax evasion.  The Belarus government had obtained details of his bank accounts by invoking an information exchange agreement with Poland.  Several senior Polish government officials lost their jobs over the affair.

Have a good weekend.

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