by Hazel Lewry
Read part 1
As a follow on to previous articles, where I suggested updating the Treaty of Union, reserved power by reserved power using a secondary ballot at the upcoming council elections, our look at the potential consequences for Scotland continues.
The last article discussed Energy and Broadcasting. Here we start by putting alcohol, tobacco, corporate tax and electoral law under the microscope. Perhaps it’s appropriate if we first examine the installation of a separate taxation department, let’s call it “Revenue Scotland” for want of a better present name, RS for short.
RS could be housed in any of the buildings presently being vacated by government services under the severe austerity trimming we are experiencing. Yes, it will cost money to inaugurate, but staffing would be absorbed from other areas that are being trimmed. It would also decentralise government from Whitehall and put money into the local economy.
My own pick for the RS headquarters would be Inverness. This would severely soften the blow from the loss of the RAF base in Moray. It could well stall an impending partial economic collapse in the area if implemented quickly enough.
Quite simply, Scottish control, with Scottish hands on Scottish levers, protecting Scottish families.
Having Revenue Scotland with initially limited responsibility back in Scotland would immediately permit issues like the “Tesco tax” and the “minimum pricing legislation” to be put back on the table, except this time they would benefit the Scottish people, not the supermarket chain’s profit margins.
In assuming the area of elections and electoral law into its sphere of influence, Holyrood can at a stroke position itself to remedy the alleged historical issues with balloting. The net cost to assume such powers would be minimal, again bringing revenues back north of the border in the form of decentralisation.
Taking electoral law into Holyrood ownership would provide an opportunity to stop the alleged past issues of postal vote fraud, double voting and fraudulent appearances. It would also prevent from ever again happening, should our parliament decide, the possibility of a dead person on the electoral roll being counted as a “no” vote. A simple statement on the mail in ballot that the voter swears he or she personally casts the vote would assist.
Ban postal votes going anywhere other than the collecting office with forwarded votes being voided. Impartial assistants could be called from another constituency to help those in difficulty, the assistants having to put an ID number on the form.
Picture ID required to vote, and for anyone who doesn’t have that, make it simple to obtain a photo voters card good for perhaps ten years. The old Scots standard of “by knowledge and repute” would suffice.
The cost to protect and ensure our democracy in Scotland would be close to zero. The greatest shame of this having to be done by Holyrood is simply because Westminster has steadfastly refused to protect our democracy. It should certainly be in place before our next national elections. There is no Barnett consequential to ensuring we have “free and fair elections”.
Another choice area for rapid assumption of powers would be corporation tax. Corporation tax should be anticipated to impact the Barnett formula. Right now corporation tax is around 26% of company profits, with business under £300,000 being hit for 20% (just reduced this year). It’s difficult to get government figures for corporation tax, but it’s recognised as historically being about 3.8% of GDP.
Having around 10% of the total population, but appearing to generate only some 8% of corporation tax, Scotland could therefore be considered having 3.8 of 8% of GDP as its share of UK corporation tax. Those are simple mathematics, easy sums if we prefer.
Not so, for the UK government will not tell anyone without substantial work what tax revenues or income really is. It’s all hidden by use of percentages without numbers. One has to wonder why the ONS is being so secretive with its reports.
Fortunately, the CIA is kind enough to publish the figures for us, letting us know it’s around $2.259 trillion, or in serious cash about (using $1.60/£1) £1,411 trillion. That puts Scotland’s corporation tax take up around £3,040 million or somewhere over £3 billion.
The beauty of Barnett comes to the fore for Scotland here, because the UK treasury would reduce Scotland’s grant by the same amount. If we cut the rate from 26% to 15% and have business flock to our land we apparently lose almost £1.5 billion in tax revenue, but not so. Scotland’s Barnett consequential would increase by approximately the same amount that corporate tax revenues decrease.
The net cost to Scotland to basically remove the economy from life support and put it on steroids is close to zero. In theory, business would locate in our country, employment would escalate and income tax would increase exponentially. In a few short years it is exceedingly likely that the additional revenues, through almost full employment and the security it brings, would significantly more than offset the lowered corporation tax rate.
This doesn’t even account for a severely dwindling unemployment and welfare bill.
As we’d still be part of a union, HM treasury would benefit through higher income tax, NI and other relevant receipts generated by a buoyant Scotland.
It is also very relevant to consider that by assuming responsibility for only two of many revenue generating areas from the UK umbrella, Scotland has come very close to removing the need for any Westminster block grant. Energy and Corporation tax between them at today’s income levels would generate almost 80% of the Barnett consequential block grant.
Closing this article we’ll delve into the smoky area of Alcohol and Tobacco. Revenues from these products directed straight to Revenue Scotland would by all appearances cover more than half the support required for NHS Scotland. Removing NHS Scotland from the life support required because of PFI/PPI could then lead to the creation of a world-beating service.
Again thanks to ONS, direct revenues take some substantial digging, but we can break it down in a much simpler fashion by looking at the tax take per pack of 20 cigarettes, approximate a pack a day for the 800,000 or so adult smokers in Scotland, add about 10% for other tobacco revenue and get a number in the region of £934,400,000.
Scotch whisky alone was reported as worth over £110 per second to the treasury, and other alcohol duty in Scotland is around £1,500 million per year. That should give Scots basic “sin” tax revenues in the region of £5.9 billion.
The argument that Scotland couldn’t support herself seems somewhat shallow – we’ve only delved into three of the great many reserved taxation areas and already find Scotland with basically balanced books. The taxes from three areas alone, and electrical energy sales revenue as it leaves Scotland isn’t even included, could put Scotland in the black (using Barnett as a base). Allowing for errors and fluctuations in markets and tax rates, it’s probably 10% either way.
There appears to be a very good reason for the obfuscation in ONS numbers. Is this why they report % instead of £, and make an investigator dig hard for the source by “region”?