UK split to lead to tax troubles

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RACHEL Holmes (Another Voice, 27 April) uses the same financial spin as the Scottish Government in her article in response to Gordon Brown. Expenditure on social protection as a percentage of GDP is not an indicator of our affordability of pensions after independence. What matters is the combination of high spending needs with the volatility of tax revenues.

A recent Institute of Fiscal Studies report records North Sea revenues as almost 50 per cent of tax receipts in the 1980s but only 3 per cent in 1991-2. More recently it was 20 per cent in 2008-9, falling to 12 per cent the following year.

This does not matter within the Union as such risks and resources are pooled. At present, North Sea revenues have fallen to 10.5 per cent of Scottish tax receipts, compared with 1.5 per cent for the UK.

For the record, Scotland has consistently spent more than the UK average on social protection – £4,169 per head at the moment, 7 per cent above the UK’s average. Although Gordon Brown used pensions as an 
illustration, his point applies to public spending as a whole, at £10,152 per head, or 15.5 per cent above the UK average.

With this combination of high spending, volatile North Sea revenues and structural fiscal deficit, an independent Scotland would face more 
serious fiscal problems than the rest of the UK. Scotland does not need another period of fiscal austerity that independence would bring just as we emerge from the current one. Rachel Holmes’ dodgy 
accounting is best ignored.

Professor Arthur Midwinter, Falkirk

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