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| October1974 |
Scotland pays its wayan article in today's Herald (front page) that says that Scotland does indeed pay it's way and are not subsidised by England.http://www.theherald.co.uk/news/news/display.var.1804171.0.0.php Scotching the myth | DAVID LEASK and DOUGLAS FRASER A series of myths about Scotland's financial position in the United Kingdom are exploded today in a special investigation by The Herald. The research represents a vital contribution to a debate over whether Scotland should take on more tax-raising powers or become independent. Our findings come amid a growing clamour from English politicians and the London-based media to curb Scotland's £26bn spending grant from the Treasury. But, as The Herald shows, much of this mischief is based not on facts but a series of myths, mistakes and misconceptions. advertisementOur research scotches five key myths, concluding that Scotland does well in some ways, but does not get special treatment within the UK. Scotland, with pockets of deprivation, one-third of the UK's land-mass and far-flung communities, does indeed receive substantial state spending, but its average of £9631 public money per head is still less than London's at £9748 or Northern Ireland's £10,271. Latest estimates show the tax take from Scotland - buoyed by the financial success of companies such as Royal Bank of Scotland - is higher than anywhere outside London. Arguments rage over North Sea oil and gas, but there is no doubt revenue from the natural resources found in waters off Scotland is being used fill the coffers of the UK exchequer. While cities such as Glasgow have high levels of incapacity benefit, the overall welfare bill at £3086 per head is actually lower in Scotland than in swaths of northern England. Public services are a mixed picture. Some have claimed Scotland gets free medical prescriptions, free school meals and has a world-leading health service, but only Wales has free prescriptions and the Scottish Government does not currently fund free school meals. It is true the Scottish Parliament has delivered a free care for the elderly package, but the flagship policy of devolution has been dogged by waiting lists and squabbles over funding. NHS waiting lists are no shorter in Scotland. Gordon Brown's elevation to Prime Minister and Alistair Darling's promotion to Chancellor raised the temperature.With two Scots in Downing Street, some politicians and the London-based media have launched political attacks. Journalist Kelvin MacKenzie provocatively told a TV debate: "The Scots exist solely on the handouts of the clever English generating wealth in London and the south-east." It is notoriously difficult to disentangle the UK's tax and spending totals to discover where the winners and losers lie. However, our study concludes that far from being "subsidy junkies", Scots pay their own way. |
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| agentmancuso |
Ha! You beat me by two minutes. | ||||||||
| Niall |
It would have been nice to have acknowledged the source of their figures which were taken from the "The Big Lie" and "The Great Deception GERS 2005" to be found at: http://www.alba.org.uk website under the title of "Scotching the myth." Apart from the fact that as author, I hold the copyright, it was damned discourteous of the Herald not to have contacted me. Well at least the truth is now getting out but it is a great pity they refused to publish my paper before May 3rd.
'S mise le meas Niall. |
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| George |
Well done Niall. Slowly but surely facts as opposed to propoganda are finding their way into mainstream Scottish politics.
The internet is the catalyst, just as the printing press was in years gone by. |
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| sgmillerton |
does not change the fact that we recieve more cash input per head than the english, which is unfair. | ||||||||
| Niall |
The figure for Scotland is still less than that spent on Londoners who receive 15% of all spending. Londoners are the UK's 'Subsidy junkies.' 'S mise Niall. |
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| iainmhor |
The biggest subsidy goes to the occupied 6 counties of Ireland. Very unfair im sure youll agree sgmillerton? Time to get them to to stand on their own two feet just like Scotland. |
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| George |
The Herald's display of partisan 'reporting' has been bad of late, worse even than that of The Scotsman on occasions.
Yesterdays 'fiscsal myths' report, whilst welcome, may be the exception to the rule....we shall see. It should be noted however that this information was readily available some months, even years ago, therefore the question must be what prompted them to report it (or at least some of it) now? I have said repeatedly over the last few months that any electorate have to be in posession of the facts before they can make reasoned decisions. This information ought to have been promulgated by all of the media prior to the recent elections, especially given the plethora of 'black hole' announcements by Labour. That it wasn't begs the question, why? The other question that now arises is how the media will deal with Wendy Alexander? given that she will have been in posession of this information when she continually stated in the midst of the campaign that Scotland relied on subsidies (Union Dividend). Finally, what does this say for the Union and it's supporters in the press when a solitary piece of non partisan reporting such as this is almost universally viewed as consolidating the independence argument. It would appear that factual information and arguments in favour of the Union are mutually exclusive. |
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| Gung-ho |
And now the Adam Smith Institute has backed Alex Salmond Tax plans
http://www.adamsmith.org/index.ph...ndent_scotland_a_road_to_riches2/ If an independent Scotland chose to follow the Republic of Ireland's low-tax route, as SNP leader Alex Salmond has indicated it would, Scotland's growth rate might be expected, over a five-year period, to move closer to Ireland's trend growth rate of 7 percent. Given a further five years of Scottish growth at that trend level, and before diminishing returns set in, Scotland's growth over the ten-year period would put its index 71.5 higher, more than a two-thirds increase in GDP. By contrast, says Stein, the rest of the UK would be expected to have grown rather less, by just over a quarter. The result would be dramatic for Scotland. Measured in household income per head, Scotland, which started £1,700 behind the rest of the UK, could be expected to be £6,000 ahead of it at the end of that period. We believe that the new research study shows just what can be achieved if countries choose to follow the low tax route to prosperity, a route which took the Republic of Ireland from the poorest country in the EU (per head) to the richest. Scotland, it says, could match that performance. |
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| sgmillerton |
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| mairead |
And what will happen to England when it has to stand on it's own two feet?
. Of course they would then have to buy the Scottish water, the Scottish electricity,the Scottish gas and the Scottish oil that is presently sent down south. |
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| agentmancuso |
Yes but would it? |
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| Economist |
I'm not sure Scotland would be a "low tax" economy, initially, but I could certainly see Scotland being a "low tax on business economy". There is emerging consensus that the tax burden on business is too high. It is utterly amazing that in reality, the only mainstream party which suggests such a policy, with any degree of seriousness, is the SNP! Personally, I would like to see us in a position where Scotland levies no form of corporate tax, but that is not likely. One of the main opportunity costs of the Union, is due to the fact that Scotland is on a different business cycle to England. As a consequence there has been relative economic underperformance which has led to successive governments' (of all political colours, might I add) absorbing the poor economic performance of Scotland, by increasing the size of the state, given a slack budget constraint. That, I would argue wouldn't be possible with independence - or full financial independence (which is effectively the same thing anyway), where the finances of the government are intricately tied to the performance of the general economy. There would be an incentive, much more of an incentive to tie economic performance to government spending. Incidentally I think an independent Scotland would actually in a better position to lower corporate taxation than the UK is. A corporate tax cut by the UK would have a huge distorting effect on capital flows in Europe, which some of the larger EU economies, like Germany may retaliate against. Such a policy in Scotland would have a negligable effect on capital flows. But of course, the only way to find out, is to make Scotland financially responsible for the full suite of government spending and taxation, that any normal government undertakes. Until that time, we will not find out which type of practice, Scotland will adopt. |
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| agentmancuso |
That would be a good start at least.
How so?
It certainly wouldn't be possible in the long-term, but my worry is that electoral populism would lead to the government's continuing to attempt to absorb poor performance in the short to medium term, hence exacerbating the problem.
Point taken. |
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| Economist |
Well, the economic structure of Scotland is different, and has a legacy of being different to the main powerhouse of the UK economy - SE England. There is a legacy of higher levels of manufacturing, higher levels of jobs in the public sector and an overall smaller economic base. Scotland even has different demographics. There is an argument that there is a ripple effect from London and the SE that does eventually reach Scotland, but by the time it does so, and the shoots of good economic performance hit Scotland, the economy of England slows down or the UK Government has to put the clamps on to cool down an overheating SE of England, and any economic recovery in Scotland, is cut down very quickly. One of the major disadvantages of having next to no control over your economic policy.
I doubt it. I don't think there will be the funds there to increase the size of the state in Scotland, even in the short term. I personally think we've reached the point of maximum state size in Scotland. I would like to see greater economic growth (in the private sector) reduce the role of the state in the economy. Much more self-sufficiency is what is needed, much more self reliance. An independent Scotland, will simply not have the capacity to be profligate. |
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| agentmancuso |
Thanks - I wasn't sure if 'business cycle' referred in this case to something more specific.
The last point seems certain at least. But issues like today's fuss over the promises made on freezing council tax are exactly the kind of thing that bothers me. The pre-election move was both populist and centralist; Holyrood should be interfering in local tax rates in this way. Nobody seems to have given any serious thought to the knock-on effects. |
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| SLG |
I don't think it's quite that simple. I think it was a populist move certainly, but also indicative of public anxiety over the spiraling rate of local taxation... (was it not something like a 60% increase in six years?). This also meant to be a stop gap until a new form of LIT can be brought in. As far as I can understand (without having read too much into it), the SNP are also freeing up councils from some of the former ring-fencing of funds that went on - hence why they are open to talks with the SNP. |
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| Economist |
There is no question the Council Tax is a rubbish form of local taxation, which needs to be replaced. I don't think it is all that accountable either. Indeed, it may be a centralised move, but then local government finance is and always has been largely centralised, given that the budgets of local authorities are largely made up of central government grants.
Another point that is worth considering on this whole issue of tax and economic underperformance. In Scotland what (in the eyes of the Scottish electorate) would be least palatable - tax rises or spending cuts? Given that I actually think Scotland is quite a conservative country, in these terms, I'd think tax rises would be least tolerated. I read somewhere that £4.5bn of central government spending in Scotland could be cut from the budget without any significant deleterious impact on frontline public services. |
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| agentmancuso |
Agreed on both points.
True. But I don't think it excusable that the SNP centralise it yet further on the grounds that it was largely centralised already.
Interesting, though it raises the question why no major party campaigns on that basis.
I don't know about the figures, but in principle, it seems very probable, yes. |
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| Economist |
I think it the SNPs objective is to get rid of the council tax in its entirety. As a result this seems to be a short term stop gap measure rather than a centralisation of the council tax to the Scottish Government.
Probably because the current devolution settlement doesn't give the Scottish Government a great deal of ability to cut or raise tax, or indeed manage government finances in their entirety (sorry, but the ability to cut or raise income tax by up to 3p in the Pound, doesn't quite cut the fiscal mustard) |
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| October1974 |
there is an article on the Channel 4 website that says London gets more money than anywhere elese in the UK
http://www.channel4.com/news/arti...et+more+than+a+fair+share/1041867 |
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| SLG |
Is that not the only reason why the SNP don't favour a locally set LIT - because they are going to have to use the 3p on income tax as the means of collecting the tax? |
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| agentmancuso |
Not quite sure I follow that SLG? | ||||||||
| Rinty |
The SNP voted against Tommy Sheridan's bill to scrap council tax on the basis that they opposed the idea of a national rate and national collection.
Of course they could have supported the bill with an amendment on collection but they chose not to. Now they want a local income tax which to all intents and purposes is just Tommy's "scottish service tax" under another name with tweaked rates. Personally, I support them now and hope that they carry it out, but hopefully remaining true to the idea that the tax will be fairer. |
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| SLG |
What I mean is that the only mechanism they have to implement LIT is to increase IT by 3p. To create a truly local LIT, they would have to be able to vary this extra IT based on council of residence, with the needs of the council determining the level of tax. I was under the impression that the simple 3p up or down mechanism that is presently available does not allow this to happen - and this is the (or one of the) reasons why the SNP don't back a locally set LIT. |
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| agentmancuso |
Sorry, yes, I see what you mean. I didn't know that to be honest. |
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