Well here we are. It is September 2015 and since the 1997 devolution referendum we have seen two Scotland Acts, are in the midst of yet another Scotland Bill, the Calman Commission, the Smith Commission, numerous proposals from the main UK parties and think tanks such as Reform Scotland and let’s not forget an independence referendum, and of course the ‘Vow’ and yet not one of 5 major taxes is controlled by the Scottish Parliament.
Even after the latest Scotland Bill becomes another Scotland Act, the Scottish Parliament will only have control of 6 minor taxes, partial control of income tax and will receive, but have no control over, 50% of VAT revenue.
Let’s look back for a minute or two.
I have been involved in the fiscal powers debate for about a decade. When I came back to Scotland I could not understand why almost no-one was arguing for increased fiscal powers for the Scottish Parliament. That is why I and a number of others set up Reform Scotland in 2007. The timing could not have been better as the SNP had just won the 2007 Scottish election. The SNP victory led to the Calman Commission. The Calman Commission reluctantly proposed 6 new tax powers for the Scottish Parliament. Let’s not forget its interim report recommended no new tax powers for the Scottish Parliament and for a number of powers to be re-reserved. So how did Westminster treat the Calman report? The 2012 Scotland Act only included three of recommended tax powers. That is when I termed the phrase ‘Calman minus’.
The comparison between Reform Scotland’s ‘fiscal powers’ papers of 2008 and 2009 was stark. Not that this seemed to bother the ‘powers at be’. You could sense at that time that they thought the 2007 election result was a flash in the pan and normal service would soon be restored.
Even now the Labour and Conservative parties can barely bring themselves to support the devolving of even air passenger duty or control of the Crown Estate to the Scottish Parliament. Mentioning corporation tax brings them out in a rash. Talking about North Sea revenue requires them to immediately lie down. The position of the Liberal Democrats is simply a disgrace when you consider its history and the recommendations contained in the 2006 Steel Commission.
That brings me to something I term the ‘Calman doctrine’. I wrote this a few years ago. “A template can be seen from Calman, what might be called the “Calman doctrine”.
Make a huge fuss about having someone look at the issue, take your time, promise a lot then exaggerate any problems and minimise or ignore any advantages for devolving substantial fiscal powers, deliver as little as possible and ensure HMRC and HM Treasury remain in control.”
That doctrine can, for the most part, just as easily be applied to the Smith Commission.
The latest Scotland Bill is of course many things but it is not ‘devo max’, nor ‘Home Rule’ or even ‘devo plus’. The choice of language used at the time the ‘Vow’ was announced was of course deliberate. Let’s also not forget that Gordon Brown promised us substantial new powers quicker than under independence. Nonsense. The most powerful devolved parliament in the world. Again, nonsense.
I concede that the campaign for fiscal autonomy is not going to be easy. Those who oppose fiscal autonomy have no shame. They are quite happy to talk Scotland down at every opportunity.
The recent UK General Election result is of huge importance to how this debate continues to develop. Compare and contrast to what is happening just now to when the previous Scotland Bill was being debated. This time the vast majority of Scottish MPs will seek to hold the UK Government and the other ‘No’ parties to account. It is though not just the Scotland Bill that requires the attention of the SNP MPs. I am very glad to see that they are also trying to overturn the disgraceful decision not to grant a VAT exemption to Police Scotland and the Scottish Fire and Rescue Service.
So here are just a few of the arguments I and others will continue to make.
We need to point out how few tax powers the Scottish Parliament has. Then there is the fact that Westminster has had numerous opportunities to devolve substantial tax powers to the Scottish Parliament but has failed to do so. The lack of logic being applied also needs to be publicised. A number of taxes are closely associated with the responsibilities already devolved to the Scottish Parliament. The devolving of these tax powers would have given the Scottish Parliament a substantial number of economic levers and the chance to develop policy more effectively.
Here are some examples:
- Succession law is devolved but inheritance tax is not.
- Environmental law is devolved but not all the environmental taxes are.
- Health is devolved but alcohol and tobacco duties are not.
- Transport is devolved but transport related taxes are not.
- Charity law is devolved but the granting of charitable tax status is not.
- Justice is devolved but the fines, forfeitures and fixed penalties imposed by our courts and tribunals go to HM Treasury.
Another issue that needs to be better understood involves what I refer to as the underlying law. A tax should be completely devolved. Controlling the headline rate on its own is not enough. The underlying law that decides the tax base also needs to be devolved. If only partial control is on offer it is because Westminster wants to stay in control.
Then there is simplification of the tax system. Simplification is often talked about but rarely taken seriously. Devolving tax powers to Scotland could also mean a less complicated tax system for the rest of the UK.
How many people are aware that a Scottish tax system is already being created? We now have a tax authority, Revenue Scotland. Two new taxes have been successfully launched. An innovative tax collection system which I can take some credit for is being used. We have a stronger General Anti-Avoidance Rule than its UK equivalent and new Scottish tax tribunals are being developed.
Then there is the wider debate that was for the most part missing from the referendum campaign.What type of taxation system do we want? Do we want to reform some of our taxes? Do we want to abolish some taxes? Are we serious about tackling tax evasion? Do we support a European financial transaction tax? Do we want a ‘one stop shop’ for all government tax, registration and legal services? A tax and welfare office based in at least each local authority HQ? ‘Sunset’ clauses? A basket of tax powers for our local authorities?
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