Economics

We Need To Talk About: Local Taxation

/ Dr Craig Dalzell / 1 Comment

 

Council

Source: Flickr

Next year brings in the Scottish Parliamentary Elections and with it comes the proposals from each of the parties on how best to use the limited powers that the Scottish Government will have at its disposal. No doubt, much of the news and comment will be around whether or not the (marginally) expanded powers over income tax coming in under the Scotland Bill 2012 will be used and by how much.

Our approach towards local taxation, however, will perhaps lead to a far more fundamental change to the fabric of our society. There is also far greater scope within the devolution powers to do something a bit more radical that simply raising or lowering the rate of tax by a penny or so (or repeatedly defending one’s reasons for not doing so). It is therefore important, before the campaigning season begins in earnest, to understand what our options are and the potential impacts of them.

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The Devolution Journey: Devolution and Tax

/ Dr Craig Dalzell / 13 Comments
A comparison of the % of devolved control in Scotland now, under 2012 and under Smith as well as a comparison with Spain and Canada. Source: Scottish Government.

A comparison of the % of devolved control in Scotland now, as it will be under the Scotland Act 2012 and under Smith Commission recommendations as well as a comparison with Spain and Canada. Source: Scottish Government.

Monday the 9th of November saw the Scotland Bill 2015 make a further step towards completion. This Bill, which has been the result of the aftermath of the 2014 independence referendum, will mark another milestone on the devolution “journey” Scotland is traveling upon.

Some of the commentary both during the actual debate in the House of Commons and in the days since have shown considerable confusion at just how the system of devolution in the UK works at the moment and how it is to change with the implementation of the Bill. Before we really settle into a meaningful debate on whether or not any “additional powers” for Scotland will be to and for Scotland’s benefit we need to actually understand what those new powers are, what we have now and how they can be used.

This article shall focus on the powers over taxation devolved to the Scottish Parliament as this area will be undergoing several rapid changes over the next few years and much of the confusion amongst members of the public has arisen from the conflation of several phases of devolution.

One must understand the rather unplanned and piecemeal nature of the progression of devolution for Scotland, there is certainly no clear “destination” to that “journey”, and this reflects and contributes to the confusion but there are three major points in the form of the Scotland Act 1998 which formed the Scottish Parliament after the success of 1997 Devolution Referendum; the Scotland Act 2012 which resulted from the 2007 Calman Commission and the aforementioned Scotland Act 2015 resulting from the Smith Commission of 2014.

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The (Economic) Madness of George

/ Dr Craig Dalzell / Leave a comment

Giddy

Last night George Osborne’s Fiscal Charter was voted on and rammed through Parliament on the back of the Tory’s majority. Today, the media focusing more on the shambles that is the current Labour party and their confused approach to supposed Opposition combined with the rumbling rebellion in the ranks as the party tries in vain to come to terms with what their members actually want the party to stand for.

Consequently, as usual, much less has been said about the actual contents of the Bill and its effects on our economy.

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We Need To Talk About: Budget Underspends

/ Dr Craig Dalzell / 39 Comments

Victoria Quay

Q. When is a surplus not a surplus?
A. When someone is talking down the Scottish Government.

Today the Auditor General published its annual report detailing an independent opinion on how well the Scottish Government is managing its finances (or how badly it is failing to do so).

This year, as last, there have been howls of anguish from those opposed to the Scottish Government at the fact highlighted by the Auditor General that the Government spent £350 million less last year than it was given in the Block Grant.

As the opening question suggests in most normal countries when your government spends less than it has available to spend then it is running what is known as a budget surplus. This is, especially in today’s economic climate, generally considered to be a “good thing“. Not so in Scotland, apparently, where the phrase to be used instead is “budget underspend”.

How this has occurred, is due to the peculiar way by which the Scottish Government is funded and is constrained to spend its money.

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How To Start a Currency From (Almost) Scratch

/ Dr Craig Dalzell / 10 Comments

An RBS £1 Note – Scottish Parliament Commemorative Issue

It’s fairly widely acknowledged that one of the weaker aspects of the 2014 Scottish Independence debate was that surrounding currency. I still hold to my long-standing view that all options open to us were and are equally viable. All come with unique benefits, all carry characteristic risks. All that was required was the will to manage those risks. Scottish Independence should never have even been about the question “Which currency should we use?”. I believe that instead, the real question was “Should we, in Scotland, have the right to ask that question?”

Recently though, the catastrophic circumstances facing Greece have focused minds back to this first question and many are now convinced that before we go into another debate on independence we must be able to answer the questions we failed to answer last year. So let us take a scenario where Scotland is faced with setting up its own currency. Just what would that involve?

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