I would like to start with an observation. Over the last few weeks I have attended a number of tax and law update seminars. Without exception the speakers have commented on the constitutional debate. Why should that surprise me? Even a few months ago this would not have happened. There might have been the odd mention of the Scotland Bill but even that would just be in passing. As one of the few lawyers who were willing to discuss tax issues in a constitutional context over the last few years I find this a welcome development. You never know someone may even listen to my call for a review if all government tax, law and registration services in Scotland.
Most Scottish local authorities will by now have sent out their 2012/13 council tax bills. This is of course an unusual bill as we know in advance that it will be the same as last year. One notable exception is Stirling Council which it seems almost by accident reduced its council tax. Although I get the sense that the council tax “freeze” is being taken for granted it cannot go on forever. It is obviously important politically and not just because we are just a few weeks away from our local elections. That said, at some point there needs to be a new review of how we finance local government. As someone who believes that our councils should have a degree of choice in this matter I would like to see this review begin as soon as possible.
The fiscal powers debate had a fairly quiet week. No new “commissions” have been announced which is a relief. An old favourite of those who oppose devolution and independence did though rear its head again. Ruth Davidson talked about giving Scotland something called “real devolution”. For “real devolution” read “no more powers for the Scottish Parliament”. Ruth Davidson said: “I want to talk about devolution – not devo max or devo plus, or devo mix, or I can’t believe it’s not devo – but real devolution from Holyrood to people and communities across Scotland.” This in my opinion is similar to the argument that the Scottish Parliament already has lots of fiscal powers that it simply fails to use. That particular argument is rarely seen outwith the opinion pages of the Scotsman.
An example of this type of thinking was given recently when the UK Government decided not to devolve control over the Crown Estate to the Scottish Parliament. Instead the UK Government passed some control over Crown Estate revenue to the National Lottery. A decision that I think it is fair to say was unexpected. More on Ruth Davidson’s statement can be found here. I will ignore the fact that Ruth Davidson appears to be at odds with what the Prime Minister said on his recent visit.
I have been following with interest the debate on introducing a “minimum price” for alcohol. This is a rare example of a policy where the aim is clearly to change behaviour and not just raise revenue. I have written before on how policy makers sometimes disingenuously argue that a policy is to change behaviour rather than increase revenue or vice versa. Personally I have struggled to understand the opposition to this policy. That said, do I think that a policy of minimum pricing on its own is enough? Of course not, nor does the Scottish Government and the myriad of health professionals who support this policy.
Do I think that an even better policy could be developed if powers over alcohol duty were to be devolved to the Scottish Parliament? Yes I do. This was also pointed out in the Scottish Government’s paper on “Devolving Excise Duty in the Scotland Bill”. Specifically this would allow the Scottish Government to “align the revenue benefit with the public spending costs of alcohol consumption.” This would also ensure that the main downside of a minimum price policy, extra revenue for the retailers of alcohol, can be balanced out. Lastly devolution, as I often say, is complicated. It makes sense to devolve those tax powers that are clearly connected with already devolved areas of responsibility such as health. The Scottish Government paper can be found here. A report from the BBC news website on this issue can also be found here.
The UK coalition government are clearly worried as to how they are being perceived on the now rather unfortunate phrase: “we are all in this together“. The Deputy Prime Minister is reportedly softening his proposals on a so called “tycoon tax”. I am not sure why this idea is being called a “tycoon tax” as this is simply a minimum net tax rate for a person’s total income. In a speech to the Liberal Democrat conference on Sunday he made no mention of a minimum tax rate less than 48 hours after announcing it. This idea is not a new idea. Most recently it has been advocated by President Obama. It is also has the advantage of a being a fairly simple idea. The Deputy Prime Minister has suggested a 20% rate. President Obama a 30% rate. The Obama proposal appeared shortly after it was reported that Republican candidate Mitt Romney, a multimillionaire, had a net tax rate of around 13%. More on this can be found here.
Let’s finish with London. Ken Livingstone has denied claims that he has not paid the “correct” amount of tax on his income. Livingstone also claims that he is the victim of a “smear campaign”. This story has some similarities with the furore that greeted the news that highly paid public officials were being paid via a company. My earlier blog on this can be found here. I have to admit to some sympathy with Livingstone on this one. Yes there is an element of hypocrisy here but Livingstone is not an elected politician, albeit a candidate, nor is he is a public official. An article from the Guardian on this can be found here.
Have a good weekend and let’s hope for some good news from Rome.
