A quick point on today’s budget and the news that Corporation Tax will be reducing to 24% over the next four years.
One of the main advantages of an independent Scotland we have been told is that we could reduce the tax bill for local or incoming businesses in order to give us a competitive edge in Europe, similar to how Ireland did with much success in the past decade. However, with corporation tax now being reduced, an independent Scotland would have to get down to the sub-20% levels before it could entice company HQs to set up north of the border which just seems too low a base to build a new country from.
With HBOS effectively no longer with us, the crippled RBS owned by the Government, oil running out, a heavy public sector, Scotland’s economy trailing the rest of the UK and now little scope for that tax-light Celtic Tiger that First Minister Salmond likes to talk about, it looks like the economy is killing off the dwindling selling points for independence one by one.
SNP Tax
7 minutes ago
23 comments:
Dunno Jeff independence looks a lot nicer than the shafting we just got. This from remote rural Scotland, no broadband(cut)fuel tax rise(VAT)child tax credit cut, child benefit cut tax up(capital gains and machinery write offs) From this farming families perspective bring on independence it cannot be worse. Michael
Jeff, the oil is pretty far from running out, it wouldn't be that difficult to gradualy reduce the bloated public sector, we have an incredible potential for re-newable enregy (personally I'd like to see more nuclear power plants so we could export that power, too), and, IIRC, I read an article several years ago which mentioned Alex Salmond would like to see Corp Tax as low as 18% in Scotland.
Yes that's right jeff.
Swallow the propaganda that somehow Scotland is a basket case unlike well over a hundred countries whcih are in a far worse state than us.
Do you ever wonder how Scotland's economy lags the UK with an attitude like that?
Ireland´s corporation tax was 10% in the period mentioned (unless I´m mistaken). That all made sense during the pre financial collapse bubble years.
The common sense thing to do is reduce the number of workers in the government sector and create an environment so that more indigenous companies can start up. What we need are more small companies.
Oil can be used to float this plan. The growth in the oil technology sector is going to be increasingly significant and should be encouraged.
Financials ain´t coming back. After the latest fraud bubble bursts there´ll be no-one to bail them out anymore and that sector will scale down hugely.
We should be increasing our domestic manufacturing to make us less dependent on imports.
All this can be done easily in an independent Scotland.
Reducing corporation tax is just one way of giving Scotland a competitive advantage. It's just an illustration of different possibilities that would exist with independence.
The problem for the SNP is that people inevitably fixate on the specific policies rather than the underlying argument. So if the UK reduces corporation tax people say, much as you are, ah hah that means you won't be able to use corporation tax to entice companies to relocate here.
Maybe not - but we could look at other ways to give Scotland a competitive advantage. The point is to have the freedom to compete in the first place.
The other point is that it's not so much about attracting companies to set up HQs in Scotland as about finding ways to prevent them leaving in the first place. We need to have something to counteract the magnetic effect of the south east. It could be corporation tax cuts or tax relief on particular industries or any number of things. But that will only happen with independence. As part of the UK there's precious little that can be done and our economy will continue to trail the south east economy.
To note the following:
*Very good decision to cut Corporation Tax. Who cares who implements it? Lower taxes is a good thing. Labour, however, would argue otherwise.
*If the Celtic Tiger model looks unattainable, lower the Corporation Tax to around the 20% level. Or, at the most extreme level, cut Corporation Tax for a length of a Parliament to attract business, and then increase it slightly. But here is the crux of the issue - would Labour allow this? I don't think so. They would prefer to tax business untill it died. How horrid.
*Anon - the broadband (cut) is actually a cut in the levy on broadband. It serves to get it to individuals who don't have it. Instead of increasing tax on individuals, the money left over from the switch over license fee fund will be used to the same purpose.
Overall, good budget. Not an easy one, but it was neccessary. If this were to be left till 2015, imagine the action that would have to be taken then. *Shudder*
Steven the broadband cut is a cut, we dinna get real broadband, the Tories have raided the telly licence and admittedly stopped the landline tax instead. End result nae broadband, just a different way tae nae broadband. We have fake broadband from BT, often slower than dial up. Tax rises savage cuts to come the poor not protected, the working poor absolutely shafted, anti rural, anti Scottish, anti children,the selfish baby boomers pensions protected at the cost of our future. Dire. Michael
How would an "independent" Scotland be able to significantly cut corporation tax given the levels of debt and deficit it would inherit?
How much extra would it cost to run all the "independent" versions of the FCO, DWP, MOD, Treasury, Central Bank and so on?
It doesn't add up, does it?
You seem to be in a filskit mood Jeff.
Thanks for provoking us into doing something about all that's wrong and dismal about Scotland.
That was your intention, right?
SM753
Care to explain why Scotland is the only country who couldn't afford it?
How do other countries manage it?
What is it about Scotland (always only Scotland) that makes it so unique that it couldn't cope with being independent?
If you follow your logic through to it's natural conclusion the UK can no longer afford to be an independent nation.
Can the UK afford to be an independent nation any more?
Good Lord Jeff, that post's so miserable you could be channelling Jim Murphy himself!
If you ever do decide that your blog title doesn't really reflect the new political climate, can I suggest something upbeat and contemporary like "Doomed, we're a' doomed...."
Indy said:
The problem for the SNP is that people inevitably fixate on the specific policies rather than the underlying argument.
You might be on to something there. Having policies is just such a drag for parties that thrive on identity politics.
>>>How would an "independent" Scotland be able to significantly cut corporation tax given the levels of debt and deficit it would inherit?<<<
That is a fantastic argument for the retention of the Union of the United Kingdom. Vote for us Unionists. We'll trash your economy, make you dependent, put you into debt and make you unable to pay that debt. But don't worry, by our warped logic you won't be able to vote for independence so that's all right then.
>>>How much extra would it cost to run all the "independent" versions of the FCO, DWP, MOD, Treasury, Central Bank and so on?<<<
Doesn't Scotland already pay a fair share of running costs of these institutions, currently? A Scottish FCO, DWP etc would be of relevant size for Scotland's needs.
Wouldn't Scotland also be entitled to a share of the capital of these institutions on wind-up of the UK? In forming their pretend national identity, the Brits like to pride themselves on fairness. I'm utterly sure that fairness would extend to Scotland recouping a fair share of the capital that it has expended over the years on these institutions should it decide on independence.
I see the gaming industry is up in arms about the removal of tax breaks which will hit Scotland's Gaming industry hard (one of the few flourishing sectors of the economy in recent years).
I think that rather knocks the original argument into a cocked hat, does it not?
sm753 - We already pay to run all of those things and it would cost us a damn sight less to run smaller, less cumbersome and bureacratic versions with all the duplication cut out.
>>>You might be on to something there. Having policies is just such a drag for parties that thrive on identity politics.<<<
You mean like the Liberal Democrats, Conservatives and Labour who are far more fixated on British identity than other parties on Scottish identity?
Well, just to say, I wasn't really stating my own personal view (or "swallowing any propaganda" for that matter), just suggesting the SNP guns might have been spiked a bit by today's announcement.
Indy, while I definitely agree that there needs to be a stronger focus on keeping companies and their HQs in Scotland (RBS relocating/bought over would be a body blow for Edinburgh), I'm not sure I agree that the real argument on independence is to win the underlying argument.
'We want to be independent so we can independent' is all very well but the specific benefits have to be communicated or the majority will always gravitate towards the status quo.
What will independence mean for the economy, schools, health etc etc? With no answers to these questions the cause won't be advancing very quickly.
Great word Hamish! I wasn't trying to be filskit* though. I do forget how sensitive pro-independence people can be when you say something, anything, that goes against their wishes. Ok, NOW I'm being filskit! ;)
For a while, my own personal view of an independent Scotland has been a low-tax, pro-sport, foody haven that is enthusiastic about its relationship with Europe (and in the Euro)
There wasn't much today that was related to Scotland but this drop in Corp Tax just made my view of an independent Scotland closer to how the UK will be. Don't worry though, I don't see the Tories nicking the pro-Euro vision....
*filskit - lively, high energy, exuberant and just a little bit naughty
Sm753, he just "doesn't add up"
Yes, Scotland alone in the world cannot balance it's books, if anyone was ever in any doubt about the anti-scottish nature of unionism, here it is.
Jeff
Most countries who become independent from another larger country, and there have been many examples in the last twenty years, do so not because of economic reasons but because there is a collective feeling of nationhood. And from that it follows, like 'normal' countries, full and independent government.
Now I know Scotland has not reached that stage, and may never, but I guess the SNP Government are not stupid enough to believe that it has, so as mentioned in previous threads, Alex Salmond & Co would most likely be looking at the next stage which is full fiscal autonomy. Bearing in mind we have Labour in opposition who want to see Calman enacted, Lib Dems in power who have a desire to take things further than Calman, and Tories who are most concerned about Barnett, as well as English votes for English policies, things look a bit rosier for the 'gradualists'.
If support for the SNP at Holyrood remains anywhere near one third of the electorate, more powers for Scotland will always be on the cards. If not for appeasement then for fear that the SNP vote goes up even higher.
Jeff that's a fair point and it's the SNP's main problem.
To move from being a unionist to believing in independence is to move from accepting that decisions will generally be taken for us to believing that decisions should be taken by us.
That's quite an abstract concept for many people, particularly those who have no understanding of or interest in politics.
However I suspect that over the next few years the argument will become somewhat less abstract as the reality of being dependent on George Osborne and co to manage our economy and fund our public services kicks in.
Andrew,
You make a good point. Fiscal autonomy probably is the next stage of the SNP's plans and is a fairly common sense move given the awkward status quo. Reduced Corporation Tax has no impact on that and, by extension and following your argument, has no impact on the Nats' current chosen path to independence.
So whatever happened to the Tartan Tiger, I guess the lesson is that there's more than one way to skin a British Bulldog ;)
Indy, I only half accept that "to move from being a unionist to believing in independence is to move from accepting that decisions will generally be taken for us to believing that decisions should be taken by us"
We already make our own decisions, just as part of a bigger 'us' than some would like. A Scottish PM, Chancellor, Foreign Sec, Transport Sec and Home Sec of one of the world's most influential countries isn't bad going for a wee nation of 5m.
Put another way, although I do agree in part with your argument, I do think you are romanticizing the "abstract concept" somewhat and glossing over the opportunities that being part of that bigger 'us' provides.
I do agree that the debate will be brought into a sharper focus over the next few years and we can both, albeit for different reasons, look forward to that.
You are correct that we make our own decisions - and the decision to stay in the Union is one of them.
But it's a fact that all important decisions in the UK will be made on the basos of what benefits London and the south east. There is nothing wrong with that because London and the south east are the most important regions of the UK.
But clearly it means that Scotland is permanently disadvantaged. As long as we decide to stick with the Union we are accepting that we are peripheral. Most people in Scotland do accept that. But as with anything else in life you have to recognise that if you allow yourself to be marginalised that usually means you get shafted.
That's why I find the current angst slightly wearisome. The fact is the Scottish people voted for cuts in public services and to protect the interests of the city of London above all else.
So suck it up or change your voting habits.
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