Back to the grind!
Highlight of the week for me was the publication of Reform Scotland’s latest fiscal powers paper “Devolution Plus”. I do though have to declare an interest as I am one of the authors of this paper. The paper outlines a possible third option, if there are to be three options put to the Scottish people instead of a straight yes or no to independence. The paper can be found here.
The debate over the top rate of income tax also continued. What was interesting was the claim by the Institute for Fiscal Studies that the 50p tax rate may not raise any extra revenue for HM Treasury and could actually reduce it due to high earners using avoidance measures. HM Treasury has already revised downwards its predictions of the amount that could be raised from the 50% rate from £7 billion a year to about £2.4 billion.
Excellent article in the Herald on Tax Increment Financing. It appears that nearly half of Scotland’s councils have made applications to the Scottish Futures Trust for permission to pilot TIF schemes. TIF involves mortgaging the future income from local business rates to borrow money from HM Treasury’s public works loan board. The Scottish Government has already been working with Edinburgh, Glasgow and North Lanarkshire councils for several years to set up TIF schemes for Leith Harbour, Buchanan Galleries shopping centre and Ravenscraig. The article can be found here.
A word of caution on TIF. I first came across TIF when working as an attorney in Chicago. One issue that has arisen in Chicago is that if too many TIF schemes are approved the benefits are diluted.
I find myself agreeing with the comments made by Everhseds LLP on the Institute for Fiscal Studies’ Mirrlees Review of the UK’s tax system. The problem with such a major reform is that we are not starting with a blank sheet of paper. Making such radical changes would require a huge amount of resources and even more political will. Neither of which appears to be present just now.
The Scottish perspective is slightly different as we will have a sheet of paper that even if not blank at least has numerous blank spaces in it when tax and fiscal powers are devolved to the Scottish Parliament. This is in fact an opportunity, possibly a once in a generation opportunity, to do something different. Hopefully this is a point that those on, and those giving evidence to, the Scottish Parliament’s Scotland Bill Committee will consider. The Eversheds comments can be found here.
