Monday, February 18, 2008
Brown u-turn on tax powers for Holyrood. Maybe
Curious, in this week of confusion and acrimony in Labour ranks over the status of this commission-that-never-was, that it is Gordon Brown who is speaking about the constitutional "review" and not Wendy Alexander. She promised that this would be a radical initiative, led by her, which would move devolution on to the next phase, and deliver a parliament that matched Scottish aspirations. The talk was of greater powers over matters like nuclear power or broadcasting. There was also a commitment to investigating new tax powers for the parliament. Speaking on behalf of his Scottish leader, the Chancellor appears to be opening the way for some discussion of “assigned taxation”. But he makes very clear that this should not be seen as a foregone conclusion, and that no one should “prejudge” the outcome of the review. This hardly inspires confidence. There is a consensus in Scottish politics which extends across the entire political spectrum - Tory, Labour, SNP, Liberal Democrat - for greater tax powers for the parliament. We need the PM to be more specific. Above all, we need Wendy Alexander to come out of her self-imposed purdah and tell us exactly what she has in mind. Some years ago, she edited a collection of essays on the future of Scottish economic policy. In her forward to this book the Scottish Labour leader wrote that the taxes which should be considered included excise duties, stamp duty, VAT, oil revenue, possibly even corporation tax. Does she actually favour any of those measures? She has surely had ample time to think about it. Should Scotland perhaps raise all of its taxes and send a contribution to Westminster for common services? This is the kind of scheme that operates in provincial parliaments in Spain. Should we go for a federal solution, as in countries like Australia, where state parliaments like Victoria are assigned stamp duty and all sales taxes (VAT)? There are many models, and all of them need to be looked at. But the premise of any inquiry should be that the present arrangements are unacceptable. The Scottish parliament has a tax-raising power - the 3p on the basic rate of income tax - which it cannot realistically use because it would create an unequal tax regime in Scotland. To give the Scottish parliament the responsibility it requires, Holyrood needs to be given its own tax powers. Here’s one suggestion. What about a beer tax to combat Scotland’s drinking problem? Over to you, Wendy.