Don’t Believe the Hype

unnamedA momentous day in Scotland – but this has nothing to do with the Smith Commission, which, despite the hyperventilating of many tabloid Tories means very little. The momentous bit is the Scottish Government’s Land Reform proposals announced yesterday, which are bad news for 432 people, but good news for 5,254,800 of us.

We expect much foaming at the mouth from the landed elite and their representatives in Westminster over these simple measures which bring us into line with most of the rest of Europe.

But Smith?

Gordon Brown – the chief architect we were led to believe – though he’s nowhere to be seen – promised ‘Home Rule’. But this has 70% of tax and 85% of welfare decisions staying at Westminster. This isn’t Home Rule, it’s not even Devo Max.

The BBC managed a whole 38 minutes of coverage of it, and with only £2.5bn devolved out of £120bn in welfare it’s small beer indeed. As Michelle Rodgers put it: “Vow = broken. Just 20% of welfare setting priority? When you can’t control even the minimum wage how on earth can you address poverty?”

The other aspect that seems forgotten amongst the excitement is that these are recommendations and may not get backed by the Coalition, still intent on shackling this to some bizarre notion of English representation. As Richard Murphy puts it (‘Scotland’s tax solution is the worst possible for everyone’):

“The trouble is Scotland does not have that power to create money. That will, as the whole referendum debate focussed upon, stay with London. So Scotland ends up with revenue collection rights but no control over money: that’s half a power at best. Scotland will remain frustrated that some real reforms will remain beyond it for time to come. If ever we wanted to know that the No vote in September was a very big mistake this is the proof.”

For our full analysis we hand you over to our Economic Editors Chuck D and Flavor Flav:

 

 

 



Categories: Economics

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14 replies

  1. Reblogged this on Wake Up Before It's Too Late and commented:
    Westminster want Scotland to be overjoyed and filled with love after the Smith Commission recommendations – merely crumbs for the children off the adult’s table…big mistake, BIG mistake…

  2. These new powers and responsibilities are a pig in a poke, no where near Home Rule/as close to federalism/Devo max that we were promised by unionists.

  3. How to piss off the Scots in one big go. And it will be further watered down by the next government. Poisoned chalice.

    Income tax power is in reality only the right to tax the poor. Because they’re the only ones who are tied to Scotland that the tax yield can reach. The rich can avoid income tax by flipping their residences to England and claiming to not be domiciled here. Or they can funnel their income generation to elsewhere in the UK. Thus avoiding income tax in Scotland.

    Poisoned chalice. poisoned chalice.

    • Quite right, MBC. You can’t have a differential tax system unless there’s a system boundary that prevents leakage. If it was politically possible, we’d already be making use of the tax varying powers we’ve got. This is all just window dressing. The only real news in the last 24 hrs has been on land reform, and that, via land value (or land revenue) taxation is where Scotland can make its political mark because the land’s not going to run away.

  4. VAT devolution is better because it yields more revenue. And everybody who buys anything has to pay it.

    But again, if you raise VAT in Scotland, people will buy the thing in England. How would it affect goods sold on Amazon?

    Lowering VAT on some items however might be interesting, because that might have the opposite effect; 55 million English market buying stuff in Scotland because the VAT makes the item cheaper. The shortfall would be quickly made up for in the greater volume sales.

    It can happen that if you lower taxes you actually increase the yield from those taxes. If a car dealership in Kelso could reduce VAT on cars, sales would rocket but it would hurt those in Northumbria.

    • Much will depend on how they calculate our block “grant”.
      If they adjust our “grant” depending on tax receipts after the event,then the whole exercise will be completely pointless and leave us no better off.
      Of course,that is the whole point,that we are no better off together.

      • The worry for me is:

        1. Scottish MPs being excluded from voting on the budget (including Barnett) because of EVEL.
        2. That tax receipts in Scotland might be lower than expected. (They frequently are. It’s not an exact science).
        3. How would we make up any shortfall in the event of 2).
        4. Therefore we need borrowing powers like Westminster has.
        5. Without the ability to make up for any shortfall in tax yields by borrowing, we would have to make sudden cuts. Difficult to forward plan. Havoc.
        6. SNP/SG gets blame for entire mess.

  5. Did we expect anything more from this charade? I hope we see these figures on the front page of tomorrow’s edition of The National. We need an antidote to spin and lies in our print media to allow the electorate to make decisions next year based on facts and not bullshit.

  6. Just passed YES rock, Ardrossan beach. Thought you might be interested in this. M x

    Sent from my Sony Xperia™ smartphone

  7. The offering is intended to make us reject it and to point out by its ample deficiencies and impediments that you can’t disaggregate a highly centralised state.

    ‘It’s either independence or nothing and you rejected independence’. That’s the message.

  8. This was like 1979 one great “con” trick something magicians of old managed. What is fair about reducing/raising taxes when we have to pay costs for collecting to HMRC. Wait until May 2015!!

  9. Smith is and always was bullshit….Don’t buy into any Westminster crap. The only way forward is refusal to give an inch on any of it. Send ‘Yes’ Alliance majority to W.E. next year and gum up the works..make the mother of all parliaments the mother of all fuckups… unworkable, and finish the job in 2016 with majority for Independence. Followed by Ref 2 giving mandate for full and complete separation.

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