Let’s start with Scotland.
According to a new report by the Scottish Government, the tax-take per person is higher in Scotland that the rest of the UK. Finance Secretary John Swinney says the analysis of tax revenue over three decades proves the country “more than pays its way”. More on this from the Herald can be found here and the Scottish Government here.
One of the UK’s foremost experts on devolution has warned that new tax-raising powers for the Scottish Parliament have “serious limitations”. Speaking to Holyrood’s finance committee, Gerard Holtham, who chaired a commission in Wales examining the case for more devolved powers for the principality, backed a much wider remit to allow the Scottish Parliament to vary individual bands within the income tax system.
Under the forthcoming Scotland Act powers, Holyrood will take control of a new Scottish rate of income tax, allowing MSPs to reduce or increase the levy as they see fit. However, they will not be able to change the rates within the system, meaning that any change will apply to lower, middle and higher rates equally. As I have argued on numerous occasions the Scotland Act 2012 income tax proposal is a mess and does not devolve any meaningful power to the Scottish Parliament. More on this from the Scotsman can be found here here.
Interesting to see how the First Minister of Wales is following the First Minister of Northern Ireland. They are both trying to use the Scottish independence referendum as a means to pressure the UK Government into devolving tax and fiscal powers. More on this from the BBC news website can be found here.
An explanation as to why the First Ministers feel that they have to use this type of argument is shown by the failure of the UK Government to devolve air passenger duty. Not all of the Calman Commission proposals were implemented by the UK Government. Air passenger duty was one of the taxes although recommended for devolving was not devolved. That is why the Scotland Act 2012 is called “Calman minus”. That is also why we are still hearing calls for air passenger duty to be devolved. More on this from the BBC news website can be found here.
It also seems that London does not want to be left behind. Boris Johnson, the Mayor of London, is again calling for new financial powers for London. The proposals, by the London Financial Commission who were appointed by Johnson, call for London to have the power to raise property and tourism taxes, and various housing and infrastructure spending powers. More on this from the Guardian can be found here. No matter the result of the Scottish independence referendum pressure on the UK Government to devolve power away from London, and ironically to London, will continue. What is particularly interesting is that this does not just mean Scotland but almost every part of the UK.
The UK Chancellor should stop discriminating against visiting foreign musicians and artists by denying them tax breaks which are offered to top foreign footballers and athletes, leaders of Britain’s biggest orchestras have argued. More on this from the Telegraph can be found here.
Launched in June 2010 by the UK coalition government, the National Insurance “holiday scheme” was aimed at cutting staffing costs for newly-established businesses outside London and the south-east of England. Eligible firms do not have to pay NI contributions for their first ten employees, with a maximum saving of £5,000 per staff member in their first year. However, the initiative, which is due to end in September, has failed to live up to its promise and it seems only a few companies have benefited from it. More on this from the Scotsman can be found here.
The House of Commons Public Accounts Committee has claimed that the UK’s largest accountancy firms are using inside knowledge from staff seconded to HM Treasury to help leading companies and wealthy individuals avoid paying UK taxes. The Public Accounts Committee has also recommended that these companies should be prevented from advising the UK Government on tax law. In its report on this issue they also claim that these firms have “undue influence over the tax system”. More on this from the BBC News website can be found here.
A controversial “sweetheart” tax deal between HMRC and Goldman Sachs worth up to £20m, was agreed in part to avoid embarrassment to George Osborne, according to the UK Government’s former head of tax. Dave Hartnett has said that he decided to settle the long-running dispute after Goldman Sachs threatened to pull out of a prized new tax framework a week after the UK Chancellor had announced that the bank had signed up to it. More on this can be found here.
HMRC raises yield from wealthy taxpayers again. The top 1% of earners paid 26.5% of the total income tax take in 2012/13, according to figures from HMRC. More on this from the STEP journal can be found here.
The Scottish Government has published a bill aimed at tackling illegal dumping. The Landfill Tax (Scotland) Bill will transfer responsibility from the UK Government for administering the tax and encourage the proper disposal and recycling of waste. More on this can be found here.
The Financial Transactions Tax has been in the news again. The negative reaction from the City of London is as expected. What is slightly more surprising is how far the UK Government will go to prevent this tax from coming into existence. The UK Government has launched a legal challenge against plans for a European Financial Transactions Tax. More on the UK Government’s challenge from the BBC news website can be found here and more generally from the Telegraph here.
Now to an example of European cooperation. The UK Chancellor of the Exchequer has signed an information exchange agreement with the finance ministers of France, Germany, Italy and Spain in yet another attempt to crack down on tax evasion. Under the agreement, banks in these countries will be forced to reveal financial details of foreign clients. More on this can be found here.
Now to matters further afield and a relatively new area for taxation, the internet. By a vote of 75 to 24, US senators adopted an amendment to a Democratic budget resolution that, by allowing states to “collect taxes on remote sales,” is intended to eventually usher in the first national, i.e. American internet sales tax. More on this can be found here and here.
Now to Greece. The International Monetary Fund has criticised Greece for making very little progress in tackling its notorious tax evasion problem. It says the rich and self-employed ‘are simply not paying their fair share’ and the tax authorities are still bedevilled by ‘pervasive political interference’. The IMF also said that Greece is making progress in overcoming deep-seated problems in the midst of a very serious and socially painful recession. More on this can be found here.
Finally the not unexpected news that Silvio Berlusconi’s four-year conviction for tax fraud on TV rights bought by his Mediaset TV empire has been upheld. Mr Berlusconi had appealed against a sentence passed by a lower court in 2012, which had found him guilty of tax fraud, but the appeals court reinstated the 2012 conviction and said he should serve four years in jail. More on this can be found here here.
Have a good weekend.