Give us meat – not metaphor

By Jim and Margaret Cuthbert

It is always a pleasure to cross swords with our old sparring partner, Jim Gallagher, particularly as he is such a master of metaphor – national treasures, forsooth. But in his critique (Bella, 10th December) of our note on the Smith recommendations, (Bella, 4th December), he relies too much on turn of phrase – and like Smith itself is light on detail. As a result, his criticisms of our paper are misplaced.

Let’s look first at the nub of Gallagher’s criticism – which, as we will see, is based on an illogicality. Gallagher states that there is no gearing problem, because the provision of paragraph 95.4(b) of Smith removes the problem. What we were saying, however, was that there would be a gearing problem if there were no provision like 95.4(b): and then we went on to criticise 95.4(b) on two grounds. First, that since it is so obscurely worded, and that since Smith does not spell out the gearing danger, then 95.4(b) could well be forgotten in implementation – in which case the gearing problem would indeed occur. But crucially, the second leg to our argument was that implementing the clause would inevitably lead to something akin to federalism – in a version which would certainly be unacceptable to rUK, or Scotland, or probably both. In other words, if the devil of 95.4(b) is in the detail of implementation, it is illogical of Jim Gallagher to attempt to answer our paper by quoting the principle of 95.4(b), without spelling out the detail of how it would be implemented.

It is disingenuous for Jim Gallagher to imply that the arrangements being implemented under the Scotland Act, to cope with the Calman reforms, would suffice: the situation under Smith is much more complex. As John S Warren and other commentators to Bella have pointed out, the arrangements as regarding the Block Grant under Smith are fundamental and have not been spelt out. (In fact, there are technical problems in Calman which have still not been resolved, as we pointed out in our submission to Smith).

Moving on to more ancillary points, it is worth noting that the examples Gallagher gives of countries such as the US and Germany, where states within them have tax raising powers with some central support, are all federal systems. When what we are arguing is that you would need to have something equivalent to federalism to make the Smith proposals work, it is bizarrely illogical for Gallagher to take the existence of successful federal systems as somehow being an argument against our position.

There is not much more to be said about Jim Gallagher’s critique that has not been covered by other commentators in Bella. However, we would like to emphasise that, in a very strange couple of paragraphs on power and responsibility, Jim Gallagher claims, among other things, that most of the long term tools for economic growth in Scotland are already devolved. This is just wrong: for example, corporation tax; competition policy; licensing for North sea oil and gas; immigration policy; relations with Europe; and a number of labour market responsibilities, are all reserved.



Categories: Economics

Tags: , ,

9 replies

  1. However, we would like to emphasise that, in a very strange couple of paragraphs on power and responsibility, Jim Gallagher claims, among other things, that most of the long term tools for economic growth in Scotland are already devolved. This is just wrong: for example, corporation tax; competition policy; licensing for North sea oil and gas; immigration policy; relations with Europe; and a number of labour market responsibilities, are all reserved.

    That is pretty much the gist of it as far as I can tell (I am not good at economics). Of course, Westminster was always going to retain the really important powers, particularly to do with taxation and welfare.

  2. Well, who would you believe, for me it is Jim and Margaret, whose reasoning rings with much more truth and thought than Gallagher’s. Watched him many times sticking up for the Union, his comments are doing just that. Again!

    • A common theme among many of those ‘sticking up for the Union’, like Gallagher, Smith etc, (unlike the Cuthberts) is that they are all still feeding from the corporate unionist trough, in one way or another. And I don’t just mean monetary rewards. High level University positions appear to be readily chucked at our loyal elite. Maybe its the processions and robes…….

  3. Will have to hold my tongue as I am sure that some of the posts will result in an increase to my blood pressure.

  4. But meat is itself a metaphor , so give us a metaphor not metaphor . Sounds like us being granted substantial powers , not substantial powers.

  5. thank god theres some brainy folk about i didna understand a thing here

  6. now is my idiots understanding of economics true or false.
    We are getting income tax devolved, but essentially no other tax raising powers. If we raise more in income tax from our own citizens then the block grant from Westminster reduces ? Even if it doesn’t reduce due to that, because we haven’t welfare devolved, if tories or red tories (as milliband promised yesterday) continued the austerity agenda and cut welfare spending then the block grant to Scotland would also be cut and we would have to utilise our income tax raising power just to mitigate the effects of the cuts (as we did with the bedroom tax)
    The crux of the matter is that because we did not get the rest of the tax raising powers it means that the Scottish Government has to increase the income tax on individuals to mitigate westminister cuts or make our society generally fairer. This makes us the people a tax cow for the government and in time the people will resent that and you can kiss independence down the swanny.

    NOW – IF you have firstly control of welfare,
    1)you could create a system that was fairer and more balanced with incentives to get folk back to work.
    2)You could implement the minimum wage as the living wage – less working poor , more income tax to spend on welfare
    3) Simpler fairer welfare system that cheaper to operate and administer – start with a blank sheet of paper.
    SECONDLY
    If you had control of the other tax raising powers
    1) Tax incentives for small and medium home grown businesses
    2) Close the loopholes for the corporate businesses
    3) Control over NI and pension provision
    4) etc etc

    In other words with the other tax raising powers , we could grow our economy , get more folk back to well paid work in proper jobs (not zero hours) thus reducing welfare spending leaving MORE money in the pot for our essential services without taxing the backsides out of our citizenry to provide even a basic level of fairness through society.

    We NEED the other powers or else we will be stitched up by westminister cuts & austerity – The only way to avoid that is by a huge block of indy MPs trading for the extra devolved powers after the next GE.

  7. I completely agree with David Steel. I think he sums it up really well. I believe that it is essential for the independence movement to emphasise that equality makes good economic sense. If done sensibly, money spent on benefits, childcare, health and education will grow the economy.

  8. I don’t have much grasp of economics either.

    But what I do grasp is that the tax yield from any tax, including income tax, will vary from year to year, though estimations of its likely yield can be made. So without the ability to borrow to make up any unexpected shortfall, the Scottish Government would find it is unable to pay for the NHS in Scotland, for example. With the block grant, you didn’t have that uncertainty. With income tax being devolved, and being deducted from the block grant, it’s going to make calculating the block grant difficult and introduce instability into the Scottish budget.

    Income tax yields differ from year to year because people die who then are no longer employed or pay their taxes, jobs are also lost and new jobs are created. Many pensioners pay income tax even if they are no longer working. If they die, that’s lost. Young people reach working age and start working and paying income tax.

    Osborne thought he would have more in income tax this year as a result of the economy ‘recovering’. But what the twat didn’t realise is that in the austerity Britain he is creating, these were all low-paid jobs which didn’t pay much income tax. Thus he’s had to borrow another £11.5 billion in September just to keep going. The national debt now stands at £1.5 trillion, and rising.

    Another issue is that high earners are smart and have recourse to tax avoidance advice. (There’s tax avoidance and tax evasion. The former is the legal avoidance of tax by playing the rules of the system, the latter is illegal). So taxing high earners differently from England might actually result in the yield from them going down, as they will just claim to be resident in Berwick or somewhere across the border.

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