Today had a big red-pen circle round it in the SNP’s schedule when they were new to office – it’s the day the referendum would have been held if Parliament had let them Bring It On! Instead, it’s Westminster that’s making the running on more powers for Scotland, and today Michael Moore (with or without Nick Clegg) will come to Edinburgh to announce what we already know – there will a Scotland Bill to legislate most of the Calman recommendations into effect.
The SNP are palpably furious to have lost the initiative to London on the final St Andrew’s Day before the election, and today is indeed significant, although largely in news management terms. Like the National Conversation, Calman was set up to listen only to one side of the argument, and the end product has been suitably lacking in radicalism.
As an anorak, the title annoys me too. If it passes, The Scotland Bill will become The Scotland Act. We already have a Scotland Act, and it’s a pretty historic document wherever you stand on the constitutional question. It’s the only legislation where any proportion of the public might just know the first memorable line: “There shall be a Scottish Parliament”. Now we’ll have to distinguish them by date, which will aggravate the anorak quotient of these future discussions.
But I digress. The plans are to devolve an odd mix powers to Holyrood. Aside from the tax question, the newsworthy items seem to be regulation of airguns, drink drive limits and speed limits. For some reason the media aren’t exercised by the proposals to split Stage 3 consideration of legislation into Stage 3 and Stage 4, the first for amendments and the second for final approval.
Now, there’s a decent consensus against free access to airguns, against drink driving, and Parliament would probably back statutory 20 mile an hour residential zones. Once changes in those areas have been made, though, what remains to do? Where’s the radical change the Coalition tell us Calman will bring? What can we do differently?
Of course, the main thrust is those tax powers, even though the aggregates levy and air passenger duty are not coming to Scotland just yet. Central to those is the idea that the equivalent of 10p is lopped off all the income tax bands in Scotland, and Holyrood then has to take an active decision about how much to raise.
Personally, I don’t think there’s any political difference between simply letting the existing Scottish Variable Rate remain unused, were it still available for use, and a 2015 post-Calman Scottish Government simply sticking 10p on tax so the bands remain the same as the rest of the UK. The bands, allowances and thresholds won’t be subject to change, and the Commission claims “this is because income tax is a progressive tax”. If that was the real reason, Holyrood would simply have been forbidden from making the bands less progressive: given the way Scotland votes, the suspicion has to be that the Grand Coalition (in the case, including Labour) don’t want Holyrood to be able to make the tax system more progressive.
The fact that the upper rates can be changed in lock-step does mark a limited improvement on the Scottish Variable Rate. It would ensure that income tax increases continue to be progressive above the £44,875 level at which the top rate kicks in, unlike the tax powers voted for in 1997 which are progressive only up to that point. So here’s the open question to Scotland’s political parties. If you had the Calman powers now, would you consider using them to limit the cuts?
#1 by Indy on November 30, 2010 - 2:43 pm
The manigfest flaws of Calman’s proposals have been well enough highlighted by economists like Andrew Hughes Hallet and the Cuthberts. Alternatively, Gerry Hassan gives a less technical critique which covers all the major flaws: http://www.gerryhassan.com/?p=1156
You are correct to see the timing as political – but it’s not just the timing that is political, it’s the whole shebang. They have decided to devolve some further tokenistic powers, which could have been transferred by parliamentary order before the last election, and set out to create a whole new tax muddle purely for political reasons because they think it will undermine the SNP.
#2 by neil craig on November 30, 2010 - 2:46 pm
Politicians wh arer scared to use a 3p change are certainly not going to use a 10p one. Everybody knows this.
Calman did consider allowing a corporation tax cahnge |(something the SNP officially want. The reason they turned it down was that it really would attract business to Scotland “inefficiently” attracted by the lower rate. This proves that all political parties know that the UK CT rate is seriously damaging to our economy (as the irish experience also proves) but since they get a lot of money from it they couldn’t care less. The paradoxical thing is that Scotland already has the de facto power to lower CT, though not to raise it. It is within our authority to give grants to anybody, so long as it is done on fair terms. Thus we could give a grant to any company of 50% of any CT taxed from activities in Scotland. Thus the SNP can, if they ever want to, greatly improve our economy in the way they have specifically promised to do. Obviously they don’t want to any more than any of the other parties.
#3 by Erchie on November 30, 2010 - 3:06 pm
James
You’re like a man obsessed!
The National Conversation was a wee bit more open than Calman. In any case, your post is about Calman, but you can’t resist shoehorning the SNP in for a swift kick on the way past?
Did Alex Salmond steal your seat in the Holyrood restaurant or something?
The basic thing is that Calman is merely the SVR writ large. A meaningless sop and a trap. Cleverer people than me have analysed it and deduced a trap in Calman that, if the tax powers were used, you would be worse off than before
#4 by James on November 30, 2010 - 4:09 pm
I’m really not obsessed with the constitutional stuff, honest. But Calman rejected independence as an option, and the NC looked only at independence. A true and open constitutional convention would have found out what the people wanted to be asked in a referendum, and my guess is it would have been two options: some genuine version of more powers for Holyrood, and some specific formulation of independence.
#5 by Erchie on November 30, 2010 - 4:37 pm
James
that is not correct
The three options under discussion in the National Conversation were
1) the status quo
2) More powers but still devolved
3) Actual Independence
I suspect the SNP wanted to draw in any Lib Dems and Labour MSPS with a spark of (small i) independence, but they couldn’t find any
#6 by Lallands Peat Worrier on November 30, 2010 - 3:44 pm
You may be in luck James. It is perfectly probable that the government will effectively just amend the 1998 Act, hence we’ll have “the Scotland Act as amended” as our companion instead of a profusion of alternatives, distinguishable by date.
#7 by James on November 30, 2010 - 4:41 pm
That would be pleasing. Thanks for reassuring me!
#8 by Lost Highlander on November 30, 2010 - 4:35 pm
Of course there is also the millions we in Scotland are going to be charged just to have the HMRC create a computer system that can work the Calman 10p. And of course there will be a fee to actually use it so no party will ever actually use the system except to increase taxation on those actually paying tax here.
#9 by Indy on November 30, 2010 - 5:53 pm
The National Conversation did not only look at independence. That’s completely untrue.
#10 by CassiusClaymore on November 30, 2010 - 6:50 pm
The only tax power which can really change the Scottish economy is corporation tax – which, if slashed, would allow us to poach a whole load of FTSE companies from London. Which is why they haven’t given us that power!
The whole thing is a Unionist plot to reduce the funds sent to Scotland, and rip us off even more than we are being ripped off already. Shame on the “Scottish” politicians trying to impose it on us.
A final thought – is a “borrowing power” really a “borrowing power” when you have to get Treasury permission to use it? And is a “tax power” really a “tax power” when the Treasury can charge you whatever they want to implement it?
CC
#11 by neil craig on December 1, 2010 - 11:21 am
As I pointed out previously the wee pretendy parliament does have the de facto power to cut corporation tax. It is just that, like ever doing anything but blaming England, they don’t have the balls to do it.
#12 by DougtheDug on December 1, 2010 - 3:52 pm
I don’t know of any country that funds tax cuts directly out of cuts to public services and then gives away any extra tax revenues from the upswing in economic activity to another parliament.
How much do you think the Scottish Government should refund in corporation tax and what public services should it cut to lower companies costs and increase Westminster’s tax take?
#13 by neil craig on December 1, 2010 - 4:53 pm
Well if you are talking about matching any cut in CT by a cut in the Scottish grant then that will, obviously, not increase the Westminster tax take.
If you are talking about a Scottish government grant matching part of them part of the CT then, equally obviously no money at all passes to Westminster.
There is no doubt whatsoever that vast quantities are wasted by the numpties, or are trams working yet? Anybody who wishes to take billions out of our potential wealth so that parasites will have hundreds of millions to spend can never, ever, under any circumstances be treated by any remotely honest person as somebody with the remotest patriotic concern for the Scottish people Doug.
#14 by Doug Daniel on November 30, 2010 - 8:45 pm
CC – Are you seriously trying to suggest that having to ask mummy and daddy if it’s okay to borrow some money is somehow restrictive? How absurd!!!!
Holyrood goes from the pocket money parliament to the parliament that is allowed to have a paper round, but can’t be trusted with a sudden influx of cash, so has to give most of it to mummy to put in a savings account, except that in a few years time Holyrood will grow up and find out that mummy spent all that money on her various addictions. Or something like that.
“More powers not to use” – is it even possible not to use the new SVR-on-steroids income tax power? The subtraction of that 10p rate from the block grant is designed for the specific purpose of forcing the hand of the 2015 Scottish Government into utilising the nominal 10p rate from the very start. As a result, HMRC had better be picking up the tab for implementation – imposing something on a country, forcing them to use it and then having the cheek to get them to pay for it is pretty undemocratic, if you ask me.
Independence will happen, no matter how much Unionist parties try to delay it. Holyrood’s powers are not enough for people, and history will repeat itself with Calman Minus, and every other bone Westminster throws to Scotland thereafter, until there are none left, and Scotland is the master of its own destiny again. I wish they’d just realise this so I could enjoy the benefits of independence while I’m still relatively young – I’ll be 33 by the time Calman comes into place, and I don’t want to have to wait until I’m in my 40s before another change takes place!
Incidentally James, were the Greens asked to take part in either the National Conversation or the Calman Commission?
#15 by cynicalHighlander on November 30, 2010 - 9:54 pm
Borrowed from CaronStrengthening Scotland’s Future bargain basement £19.75
Its amazing how low LibDems will go for a limo
As we voted for tax powers (relinquished in 2000 by Lab/Lib admin) are we going to be allowed one on Calman?
#16 by Mike Small on November 30, 2010 - 11:05 pm
James – first of all it would be worth replying to the reality that ‘The National Conversation did not only look at independence.’
In some senses the question that is being posed to us all is ‘what is the most effective response to the reactionary forces that are gripping Britain and are destroying our natural environment?’ All else stems from this and if this doesn’t result in a green-left-nationalist alliance then we won’t build a movement for change.
#17 by steve on November 30, 2010 - 11:06 pm
In answer to your question, I would. But I’m now over the SVR thing, so I’ll move on to a local income tax. I’d scrap the council tax, and replace it with a local income tax, you could then do all the things you can’t do with SVR or Calman tax powers, so you could have a more generous tax free element, and make it more progressive than Calman, perhaps having a few bands that get higher for really high earners. Also you could levy it on different types of income, such as income from savings and dividends, or even a special bonus tax. I would then be tempted to say no thanks to the calman powers, but put up the 10p on local income tax. that way we have an extremely low headline rate of income tax, (10p), we don’t have to pay HMRc to administer Calman since we’re not using it, and you shift the balance of funding towards local government, potentially devolving power down to levels where ordinary people can have more of an influence.
#18 by James on December 1, 2010 - 10:53 am
Yup, apologies, I got that wrong. I’m looking back at the consultation and it does talk about two “more powers” options, either Devo Max or Calman. Not sure whether I fell for opposition spin that it was all about independence, or indeed pro-independence spin to the same effect, but either way, that was wrong.
I still think a properly open rebooted Constitutional Convention, truly independent of Government (as well as of the other parties), would have been a better answer than either the NC or Calman, though.
#19 by Erchie on December 1, 2010 - 12:59 pm
James
You have made a couple of these glaring factual errors lately. Ones that a quick check would solve.
I think you are ready for the next stage, supplanting Hamish MacDonell at the CalMerc!
Sarcasm aside, generally you cover good points, so keep at it, this one Cybernat, at least, appreciates you
#20 by Chris on December 2, 2010 - 1:05 pm
The council tax is unjust as it was introduced in a rush simply to replace the poll tax. I don’t think there really wasn’t all that much wrong with Domestic Rates in the first place. Although the proposers of the Poll Tax can always find enough pensioners living in 6-bedroom houses to establish its only major flaw.
My main concern with LIT is that it puts an enormous tax burden on one economic activity: earning money. For taxes to work well they need to be levied in small bits on all sorts of activity so that there is little distortion in people’s behaviour.
If we were to switch straight from council tax to LIT there would be two distinct effects: the removal of council tax would cause a sudden rise in house prices: this would produce pain all round for house buyers and windfall gains for house sellers (ie the descendents of the recently deceased). At the same time tax on working and earning would go up: which would have some discouragement effect on people’s willingness to work.
Of course a switch from council tax to LIT will be an immediate gain for people who live off of savings or untaxed income (e.g. capital gains).
There are also technical difficulties of collecting LIT at different rates throughout the country. And I imagine people will find it very advantageous to pretend they live in a cheaper area.
If we are to change Local Government FInance I reckon we need to both introduce rates and localise business rates so that councils have a much bigger hand to play when balancing their budgets.
On the other hand if we were to look at LIT I would like to see a Calmanesque system where there is a much reduced central government grant to councils and this is replaced by a wider local income tax. In this way councils would be fully accountable to their electorate for the full level of spending. This could be implemented along with some equalisation measures.
#21 by neil craig on December 3, 2010 - 3:23 pm
The one thing we know for certain is that the SNP will never use any serious powers they are given. They have neither the guts or brains for independence & exist simply to beg England for more money while girningat them.
The height of their ambition, as demonstrated above, is to destroy our economy just so we can be a drag on England. It is shameful that Scotland, which once used to lead the world in so many fields now has a political class of such thieving parasites.