The Scotland Bill again takes centre stage in “tax land”

Let’s start with the fiscal powers debate.

Another interesting week.  When I started writing about the fiscal powers debate I was of course writing about Scotland and its relationship with the rest of the UK.   That debate is now reaching maturity and the end of the Scottish “Phoney War” is in sight.  That being the Scotland Bill.  The real debate between “devo max” and independence is just about to break through the Ardennes.

What I have found fascinating this week is the emergence of a second fiscal powers front into the public domain.  This is no longer just an issue for a relatively small group of Euro sceptics.

Prior to WWII the Germans feared a second front.  Even though they feared it, that is what they ended up with.  The UK now finds itself fighting on two fiscal powers fronts.  The second front being its fiscal relationship with the European Union.  This goes further than the proposed European financial transaction tax.  How much fiscal union will Germany and France press for?  That is the elephant in the room.

As I have blogged on before, the analogy between these two fiscal powers debate is an obvious one and poses difficult questions for each side in the debate.   Just to add to the complexity of this matter, two other fronts could flair up at anytime: Northern Ireland and Wales.

So what has been happening here in Scotland.  The Scottish Parliament’s Scotland Bill Committee has now issued its final report.  The report can be found here.  The Committee has said it is “unable to recommend” the Bill.  The  Committee also found that the plans were “not yet fit for purpose”.

What will the UK Government do?  I suspect many in Westminster and not just in the coalition would like to see the Bill fail.  Excellent blog by Alan Trench on this point.  Alan’s blog can be found here.

The report shows perfectly how the gulf between the UK Government and those arguing for “devo max” or independence is as wide as ever.  One example.  The UK Government’s refusal to devolve complete control of the Crown Estate to the Scottish Parliament.  Last week a similar announcement was made concerning air passenger duty.  Even the Labour, the Tory and the Lib Dem members of the Scotland Bill Committee want control over the Crown Estate to be devolved.

The UK Government, and the Labour party, will also have to deal with an amendment by George Foulkes to the Scotland Bill.  His amendment calls for all fiscal powers to pass to the Scottish Parliament.

As I said another interesting week.  Also difficult to keep up with all that is happening.

A quick point on Europe.  Glad to see that the Prime Minister finally started to talk about Scotland and Birmingham in the context of financial services.  He clearly realised that continuously banging on about the City of London was not going down well in other parts of the UK.

Now to other matters.  Finance Secretary John Swinney has announced that business rates will rise by 5.6% next year.  The rate currently stands at 42.6p, and will rise to 45p.  An opportunity missed?  Possibly.  We might not have heard the last on this.

HMRC have published information on the new “Rural Fuel Duty relief scheme” for retailers of road fuel on the Inner and Outer Hebrides, the Northern Isles, the Islands of the Clyde and the Isles of Scilly.  This is being introduced on 1 January 2012.  More information can be found here.  This has received relatively little publicity.

I was not surprised to read that the controversial head of HMRC, Dave Hartnett, will “retire” in the summer of 2012.  Mr Hartnett is no stronger to controversy.  His recent apology to the House of Commons Public Accounts Committee MPs for the tax deal negotiated by HMRC with Goldman Sachs was I suspect the final straw.

Finally, I found myself agreeing with the claim made by McGrigors that tax officials are increasingly using legal powers to force the settlement of unpaid tax bills in Scotland.   Information obtained by McGrigors under the Freedom of Information Act showed the number of petitions for bankruptcy filed by HMRC in Scotland increased by 97% over a three-year period.  The use of similar powers in England and Wales fell over the same period.  The story from BBC News can be found here.  Excellent work by McGrigors.

Have a good weekend.

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