TAX PLANS WILL DAMAGE SCOTLAND'S ECONOMY

TAX PLANS WILL DAMAGE SCOTLAND'S ECONOMY

MURPHY MAKES A BAD JOB WORSE
The UK Government’s proposals to introduce the tax reforms proposed by the Calman Commission have made a bad plan worse according to respected economists Jim and Margaret Cuthbert.

The proposals which are designed so that any increased economic activity from lower tax rates benefits the UK Treasury rather than the Scottish Government have already been criticised by economist and member of the Calman Commission’s fiscal advisory board Andrew Hughes Hallett.

In their latest examination of the plans the Cuthberts look at the transitional arrangements proposed by Jim Murphy on top of the Calman plans and demonstrate the negative effect they will have on Scotland’s economy and on taxation.

Writing in Public Finance they say:
“The transitional arrangements would increase the disincentive for the Scottish Government to introduce a fiscal stimulus package, including a cut in the Scottish rate of income tax. Instead if it needed to increase its revenues, it would be forced to increase the tax rate – at the expense of deflating the Scottish economy. Far from having a stake in the success of that economy, the Scottish Government would have, in effect, the opposite.”

Commenting on the analysis SNP MSP and Finance Committee member Linda Fabiani said:
“Only Labour could take these damaging plans and make them worse.
“Far from proposing a system of fiscal autonomy that would enhance both the power and responsibility for taxation in Scotland this plan seems designed to leave the Scottish Government with one hand tied behind its back.

“No other government in the world would face a situation where rather than increase economic growth to increase revenues it is expected to increase taxes and potentially damage growth.

“These plans are utterly perverse and increasingly incompetent.
“The Scottish Government should have responsibility for taxation in Scotland. Short of independence full fiscal autonomy is the only way this can be delivered.

“Labour’s half baked electoral fudge is set to make Scotland’s situation worse not better.”