Let’s start with the recent local government election. I was disappointed that none of the main parties, of which Scotland now only appears to have three, put forward any serious proposals for reforming how we pay for our local services. There is though one body actively campaigning on this issue and that is the think tank, Reform Scotland. An article in the Scotsman on this can be found here. Reform Scotland want our local authorities to have the power to decide whether to adopt a property tax such as the Council Tax or a land value tax or instead opt for an income tax, a consumption tax or a number of different local taxes.
Now to fiscal powers and the fact that National Insurance turns 100 in July. 100 not out but for how much longer? The idea of combining income tax and National Insurance was considered by a working party as long ago as 1993. The main reason for this is the erosion of the link between National Insurance contributions and welfare benefits. This issue is again being looked at. Do I think we will see a complete merger? No, unless both income tax and National Insurance are controlled by the Scottish Parliament. This is an example of how a Scottish tax system could create a more simplified system.
Again on fiscal powers. I was not surprised to see a number of Conservative MPs arguing for a “Devo Plus Bill” as part of an “alternative Queen’s Speech”. This was published on the Conservative Home website. Conservative Home support the Reform Scotland proposal which would devolve all taxes to Scotland except VAT and National Insurance. More on this can be found here.
Now to a group of people termed “High Net Worth”. HMRC has announced that its High Net Worth Unit’s tougher approach on wealthy taxpayers has resulted in an extra £200m of tax revenue. David Gauke, Exchequer Secretary to HM Treasury, said: “The Unit’s approach ensures that HMRC is working as effectively as possible with the very wealthy and that they are contributing a fair share”. This was reported in the Financial Times on 6 May. The article also claims that the amount collected by this Unit has doubled since it began operations in 2009-10. The aim is for £560m by 2014-15. This does though beg the question: why was this Unit only set up in 2009?
Now to a claim that the UK Government Minister for Civil Society, Nick Hurd, was never consulted about the cap on charitable tax relief announced by HM Treasury in March. More on this from the STEP journal can be found here. The UK Government has been at sixes and sevens on this policy. I will be surprised if it survives the summer. Unless of course summer is already behind us.
Again from the STEP Journal. 1.6 million people should have received letters by now from HMRC warning them that they have been undercharged tax under the PAYE system and will have to pay extra. Another 3.5 million people will be given a tax refund. The STEP article can be found here. An example of the sheer scale of the UK tax system and the problems it faces.
Good to see that the Scottish Government’s prosecution service has passed 20 cases of large scale tax avoidance to HMRC for investigation. An article on this from the Scotsman can be found here. The referencing of Al Capone must be compulsory when journalists write about this subject.
Sometimes an argument just makes you shake your head. The Scottish Government has announced that the minimum price for alcohol will be 50p. Although this proposal has received a huge amount of support, the leader of the CBI in Scotland has warned that supermarkets are likely to receive millions in extra revenue from drink sales. That of course is true. So why is this organisation against the devolving of control of alcohol duty to the Scottish Parliament and the Scottish Government’s Public Health Levy (also known as the “Tesco tax”)? There is of course no need to answer that question. An article from the Scotsman on this can be found here.
It seems that top rates of personal income tax across the Organisation for Economic Cooperation and Development (OECD) countries have begun to rise again in recent years after three decades of steady reductions. The OECD press release can be found here. Let’s not forget one of the main reasons for the reduction. Politicians decided that “stealth taxes” were a better option. For “better option” read “will help me get elected”. The economic crisis put paid to that “cunning plan”.
“A serial killer is stalking the wealthy suburbs of Athens with an idiosyncratic choice of victims. They are all rich Greeks who have failed to pay their taxes, and their corpses have been left scattered among the ruins of the ancient city, dead of hemlock poisoning, the means of Socrates’ execution.” This is the plot of the latest bestselling novel by Petros Markaris, who has combined the roles of thriller writer and social commentator in Greece to such an extent that he has become one of the most widely quoted voices in the crisis. The article on this from Business insider can be found here.
Now to a story that combines sport, tax and the financial crisis. Diego Maradona is suing the Italian government for £40m, despite owing it £32m in unpaid taxes. Only in Italy! The article from the Metro can be found here.
Lastly, an update on an issue I wrote about recently. Co-founder of Facebook, Eduardo Saverin, is one of the thousands of wealthy Americans to have renounced his citizenship recently in order to avoid the country’s international taxation regime. An issue for those planning a Scottish tax system to ponder. An article on this from the STEP journal can be found here.
Have a good week.
