Why Calman proposals will wither away

Published on Friday 20 November 2009 21:25

YOUR headline "Tories told to come clean on Scots tax" (19 November) should have been addressed to the Labour Party in relation to their intention to introduce the Calman Commission's additional tax power for Scotland, because they have some explaining to do.

Taxation raised in Scotland is shipped off to Westminster to fund our block grant – under Calman the 4.150 billion of tax proceeds would be recovered from the grant, giving the impression for our English neighbours that our block grant was being reduced and that we were raising more of our own money – that should strengthen the Union, but it is all cosmetic. However, that does not reflect the effects of implementing a tax rate reduction that produces possible increased income tax revenue from additional employment, and additional VAT from sales – the latter would, in any event, continue to be sent off to the UK exchequer.

Although Calman and the independent expert group chaired by Professor Anton Muscatelli referred to the Barnett squeeze, no link is made with that shortfall in our funding or with the new income tax "opportunity". If our block grant is 30bn, and the Barnett squeeze is 1 per cent, our annual loss is 300 million, so most of the 415m proceeds of a 1p income tax increase would be required annually to make up the deficit.

Hitherto, massive increases in council tax have alleviated the squeeze. Were Barnett to run on, as Calman suggests, per capita spending in England and Scotland would eventually converge, but it is disconcerting that the evidence from the expert group shows no attempt was made to ascertain the progressive figures, which must be available in the Treasury; these would have proved the present situation and how we got there.

Would Jim Murphy now care to calculate the real costs of administering the Calman tax proposal, just as he did with his assessment of the cost of having the SNP's fiscal autonomy?

The Union must be hanging on a very shoogly peg if it depends on the cumbersome and fantasy income tax proposal from Calman. The paradox is that implementing the proposal will be detrimental to the Union, and so it will not happen. The intention to introduce it is written into the Queen's Speech; notwithstanding that, my guess is it will wither on the vine, and that the shortcomings of Calman will eventually trigger some common savvy on developing the so-called devolution "process" and on facing up to reality.

DOUGLAS R MAYER

Thomson Crescent

Currie, Midlothian