Eddie Barnes: Now would be a perfect time to present voters with a more efficient tax system for Scotland

David Cameron. Picture: Getty
David Cameron. Picture: Getty
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SOME facts have the capacity to stop everything.

Oxford University professor of economics Paul Collier writes in this month’s edition of Prospect magazine that the country which can claim the title of the world’s largest exporter of bananas is not Brazil, not Mexico, nor, in fact, anywhere in the tropics.

No, the title belongs to the British Crown Dependency of Jersey.

Collier is advising the UK government on tax avoidance. And, ahead of the G8 summit in Northern Ireland later this year, he is now calling on David Cameron to tackle the issue head on.

Jersey’s hitherto unknown expertise in the banana business has not, of course, got anything to do with the quality of its soil or the expertise of its farmers. It is simply because, as a tax haven, it gives firms the chance to make profits free of any liabilities. Collier estimates that the amount of private wealth sitting in tax havens is now in the order of $21 trillion (£13.7tr).

Collier is hopeful that, at Loch Erne, David Cameron will seize his chance as host to demand an international settlement on the wanton tax avoidance by companies across the globe. Many obstacles stand in the way of reform, he notes. But if Cameron pledged to correct London’s reputation as the global home of corporate trickery, then others might feel obliged to do the same.

The craziness of Britain’s tax system, as exemplified by Jersey’s status, is widely appreciated. In 2011, a review, written by Nobel Prize-winning economist Sir James Mirrlees claimed that the “absurd” mess of the UK tax system led to billions of pounds being squandered due to avoidance and abuse.

It is not just avoidance that is the problem, add others: last month, the former head of the civil service, Lord O’Donnell, described some of the payments authorised by Whitehall as “bonkers” (he was referring specifically to winter fuel payments to retired millionaires in the Med).

The problem, as Lord O’Donnell alluded to, is that the status quo has advocates and backers, change has few. And as Sir James also acknowledged, it is often too much to expect politicians to turn the tanker around.

Yet, here in Scotland, pro-independence campaigners have fewer such excuses. They now have an opportunity to show how a tax system designed from a blank piece of paper might be better and more efficient than the UK version which has accumulated complexity in a way that a boat attracts barnacles. The plan devised by Sir James, who sits on the Scottish Government’s fiscal commission, is now being used as a “starting point” for a review of such a system.

But, only a year and a bit out from the big day, the Yes campaign has had far too little to say about how a new system, post-independence, might work. Professor Collier this month exposes in one fact the almost surreal absurdity of the current tax set-up. An alternative for Scotland is promised – but remains to be unveiled.