Let’s start with “Land Reform”. The First Minister has set up a group of experts to look at this issue. The First Minister wants the group “to deliver radical change” for both rural and urban areas. It will be chaired by former Moderator of the General Assembly of the Church of Scotland, Dr Alison Elliot. More information on the review can be found here. One factor that is noticeable by its absence is taxation. This should also be a review of how we tax our land and property. If not included this is an opportunity missed.
Who is to blame for the state of the economy? You would have though bankers might be high up on any list. However, it seems there is another favoured suspect, tradesmen. David Gauke, Exchequer Secretary at the UK Treasury, called people who pay tradesmen in cash “morally wrong”. He has also claimed that the UK Government has missed out on about £2bn on taxes on these “off the books” transactions.
In response the regularly excellent Ian Bell wrote an article titled “Plumbers dodging VAT aren’t to blame for economic mess”. His article in the Herald article can be found here. This is one of the best articles I have read recently.
Gauke was also not helped when it transpired that Boris Johnson, David Cameron and Nick Clegg have engaged in the practice of paying tradesmen cash. Gauke’s full speech can be found here.
The tradesmen issue aside, there were many good things in Gauke’s speech. This includes a new UK Treasury consultation paper on giving HMRC new powers to force tax firms to disclose clients who are using tax avoidance schemes. A report on this from the BBC news website can be found here. More information on this consultation can be found here. It is though still surprising that the UK Treasury has taken so long to even consider measures such as this.
It is always worth putting figures in context. A new study for the lobbying group Tax Justice Network claims that wealthy individuals worldwide are holding at least $21 trillion in bank accounts in low-tax jurisdictions. This dwarfs the £2bn figure mentioned above. A report on this from the STEP Journal can be found here.
Now to the Scottish Government’s consultation on its proposed Land and Buildings Transaction Tax. The consultation can be found here. The Land and Buildings Transaction Tax will replace the current UK Stamp Duty Land Tax from April 2015. This is important as it is effectively the beginning of a Scottish tax system. The consultation is also of a standard that we will now expect. Previous papers on corporation tax and excise duty, although not consultations, were simply not good enough. Lessons clearly have been learned. The consultation ends on 30 August 2012.
Now to the North Sea. George Osborne has pledged £500m in tax breaks for companies developing the Cygnus gas field in the North Sea. In addition two Chinese firms announced major acquisitions worth over £10bn in North Sea oil firms. More on these stories can be found on BBC news website here and the Press & Journal here. It seems that there is a great deal of life left in the North Sea and not just in Scottish waters.
One of the most important art objects ever donated to Scotland’s national collection in lieu of inheritance tax has gone on display. The Hamilton-Rothschild Tazza, a Byzantine sardonyx bowl mounted on a 16th-century gold stand, came from the estate of Edmund de Rothschild, who died in 2009, under the “Acceptance in Lieu scheme”. A report on this from the STV website can be found here.
Now to an issue I have blogged about before. An investigation for the Sunday Herald has shown that due to the charitable status of fee-paying schools in Scotland, while local authority schools have to pay full non-domestic rates, because many fee-paying schools are charities they receive an 80 per cent discount on their rates. The investigation suggests the discount has saved private schools in the six local authority areas investigated £10m over three years. An article on this issue from the Sunday Herald article can be found here.
This issue shows how complicated devolution can be. Non-domestic rates and charitable status are devolved matters. Tax relief for charities is a reserved matter even under the provisions of the 2012 Scotland Act.
Interestingly in the same week Stephen Twigg, Shadow UK Education Secretary, has said that Labour may remove the charitable status of some private schools. Twigg warned that a UK Labour Government could enact legislation so that private schools not serving the community would lose their charitable status.
The UK Government has finally confirmed that fuel duty, air passenger duty and road tax are not environmental taxes. This means that they are “revenue raisers” pure and simple. The UK Treasury now defines an environmental tax as a charge which is explicitly linked to Westminster’s environmental aims, aimed at promoting behaviour change and is structured so that people pay more based on the potential damage caused to the environment. An article on this from Holyrood can be found here.
I think I will finish with China and its attempt to attract more foreign investment. China has slashed from 10% to 5% the withholding taxes it levies on profits repatriated by foreign companies, and on dividends paid to foreign shareholders of Chinese-quoted shares. The concessions apply only to companies based in double tax treaty partner countries, excluding the US. A FT China article on this can be found here.
Have a good weekend.
