0131 524 9500 | info@reformscotland.com

Give Scotland Chancellor of its own, says think tank – Herald

Robbie Dinwoodie
\r\nThe Herald, 21.11.08

\r\n

Scotland should be given a free hand over 60% of its taxation, with its own Treasury and Chancellor, according to a think tank report.
\r\n
\r\nReform Scotland yesterday did what another exercise earlier in the week failed to do – come up with firm proposals on how financial accountability could be given to Holyrood while maintaining the UK.
\r\n
\r\nThe report for the Calman Commission this week by the expert group chaired by Professor Anton Muscatelli set out many of the possibilities for making Holyrood more responsible for its finances, without coming to any firm conclusions.
\r\n
\r\nBut Reform Scotland, the free market think tank, yesterday advocated a radical solution based on no change to the existing constitutional settlement, but with a clear recognition of the existing funding and taxation levels.
\r\n
\r\nAt present some 40% of government spending in or for Scotland is on services provided by Westminster, such as social security or defence, while 60% goes on areas such as health, education or justice, which are provided by Holyrood.
\r\n
\r\nBen Thomson, chairman and founder of Reform Scotland and chairman of Noble Group, yesterday proposed that a Holyrood Treasury department should be given borrowing powers and complete control of 60% of that taxation revenue, with a Scottish Chancellor then able to vary, cut or add to these taxes in order to stimulate economic growth.
\r\n
\r\n"The Scottish Parliament\’s almost total reliance on the block grant limits its accountability. Equally, it provides no incentive for politicians in Scotland to come up with innovative ideas to boost economic growth or improve public services because, however poorly the economy performs, the money still rolls in via the block grant."
\r\n
\r\nThe report, drawn up with the aid of economist Graeme Blackett and tax lawyer James Aitken, suggests a model in which Scotland would keep 60% of income tax revenues and the Holyrood Chancellor would have full freedom to raise or lower rates or thresholds. Oil revenues would also be split 60:40, as would VAT, which would have to remain harmonised because of EU rules. The same would apply to TV licence income, passport fees and lottery levies.
\r\n
\r\nNational Insurance would go wholly to Westminster, but corporation tax, fuel and vehicle excise duty, alcohol and tobacco duty, stamp duty and capital gains tax would go wholly to Holyrood, which would have freedom to amend, extend or abolish any of these. The Scottish Parliament and local authorities would then have freedom to levy any other taxes they saw fit, accepting the electoral consequences if these were unpopular.
\r\n
\r\nThe report also envisages the creation of an England Office or other such body to represent the interests of England as the identification and division of UK taxation income is worked out. Wales or Northern Ireland could in future choose whether to follow Scotland or stick with a block grant allocation.
\r\n
\r\nMr Blackett said: "We recommend that a Scottish Exchequer, and that would require a Scottish Chancellor, is established as part of the new financial settlement."
\r\n
\r\nMr Thomson added: "In the business world if you want the different divisions within your organisation to work well, the answer is to give them responsibility. We believe that at the national level by having our own taxation powers you can stimulate the things you need to stimulate."
\r\n
\r\nAir passenger duty, alcohol taxes or corporation tax were all among the things that a Scottish Chancellor might choose to vary in pursuit of economic growth or other policy objectives, the report suggests.
\r\n
\r\nSNP Treasury spokesman Stewart Hosie said last night: "This is a welcome contribution to the debate and part of a growing body of opinion calling for borrowing powers for Scotland. I am confident this report will be considered carefully by the Scottish Government\’s National Conversa tion, I hope the Calman Commission will do the same."
\r\n
\r\n