ECONOMISTS CONDEMN CALMAN TAX PROPOSALS.

ECONOMISTS CONDEMN CALMAN TAX PROPOSALS.

MAIN BENEFICIARY WOULD BE UK TREASURY NOT SCOTTISH PEOPLE,

In an open letter to the Calman Commission addressed to MSPs of all parties independent economists Jim and Margaret Cuthbert have raised serious concerns over the impact the Calman Commission’s tax proposals would have on the Scottish Government’s budget and Scotland’s economy.

If Calman's plans were implemented they warn Scotland could be caught in a “deflationary trap” and that “fiscal drag” could lead to reduced revenues as Scotland would receive a lower portion of revenue from high rate tax payers. The paper by independent economists Jim and Margaret Cuthbert also states that if the UK Government was to change UK tax bands “at the very least this would open the Scottish Government to the danger of unpredictable and unplanned changes in its tax revenues. At its worst this situation could be manipulated deliberately by a UK Government if it wished to trim the resources going to Scotland. Either way the Scottish Government would be placed in an unsupportable position.”

The letter continues to point out that where an independent fiscal system could cut tax rates to stimulate economic growth, with any short term loss of revenue compensated for by a long term increase – under the Calman proposals the Scottish Government would feel the impact of a short term loss but the UK Treasury would receive the increased revenues of any growth generated as a result. The Cuthberts state;

“A devolved government operating under the Calman rules, facing exactly the same tax revenue curves, would face a permanent hit in its revenues if it cut taxes: overall taxes would ultimately grow – but the beneficiary would be the UK Treasury.”

Commenting on the letter SNP MSP and Finance Committee member Linda Fabiani said;
“Short of independence, the only sensible way to improve Scotland’s fiscal accountability is with full fiscal powers transferred to the Scottish Government and Parliament, and Scotland securing full fiscal autonomy.

“In creating this untested proposal, Calman and his Commission have jumped through hoops to create a system that offers Scottish taxpayers and voters little upside and lots of downside.

“This system appears deliberately designed to catch Scottish finances in a fiscal trap.
“The only beneficiary appears to be the Treasury – no matter what steps a future Scottish Government would take.
“Added to the criticism of these proposals from a wide range of Scottish economists, including a member of Calman’s expert panel, this letter is a further sign that the financial proposals from the Calman Commission would do Scotland more harm than good and that the only sensible reform is for the Scottish Parliament to have full control of Scotland’s fiscal levers.

“On specific Calman proposals where there should now be unanimity – transferring responsibilities for air weapons, drink-drive and speed limits, the running of Scottish Parliament elections, and the prescription of controlled substances – we should get on and implement these now. On the central issues of funding, the Calman parties should be prepared to put their shoddy proposals before the people of Scotland in a referendum – and I am very confident that the case for independence and full fiscal autonomy would be successful.”