Letter: Fiscal autonomy key to Scottish recovery

Keeping interest rates artificially low led to exponential house price inflation, and a credit-driven marketplace with increased sales flooding the UK exchequer with the tax proceeds. Meantime, we had over 100 stealth taxes and on top of that Labour embarked on a policy of borrowing.

Even if the banks had not collapsed, their deficit was already heading for the 180 billion quoted at the start of the 2010 election campaign. Had interest rates been increased, that would have controlled the flow of cash to meaningful levels, the banks would not have run out and their wheeling and dealing outwith the normal conventions would not have happened. Economist Nourial Roubini, among others, blames too-low interest rates for the debacle developing.

It is astonishing that McMillan should be so concerned about the plight of the "poor"; I thought 13 years of a Labour government had put an end to that. Even more outrageous is her solution: invoke the tartan tax of 3p on income tax, which she claims would raise, out of the pockets of Scottish workers, 1 billion of spending capacity. However, no party has come within a million miles of applying the tartan tax, whether up or down.

But how did she manage to overlook the intention of the UK coalition to introduce the Calman tax proposal whereby we would take responsibility for half of the proceeds of the standard rate of income tax, estimated at 4.150bn and the power to vary the rate of tax? So 1p would raise 415 million, and 3p would raise 1.230bn.

But I would not bet on either figure being accurate. Calman would be as big a disaster as the tartan tax, and as costly to administer - at least we have had the option of introducing it or not; Calman will be thrust upon us, this time by a Conservative/Liberal Democratic coalition. In any event, what we need is a reduction in income tax, not an increase.

But McMillan is apparently more concerned about maintaining our over-blown public sector, inflated by an increase, under Labour, of over 50,000 in Scotland.

Jamieson highlights the need in Scotland for increased enterprise and sustainable growth. However, without proper control over the necessary levers of power, there is a limit to the extent that that could be achieved.

The economy is not a devolved matter; it is reserved to Westminster. No matter how the private sector works its socks off, the tax proceeds of any increase in our GDP have to be shipped off to the UK exchequer, and that would apply, too, if we had the power to reduce the rate of income tax in order to grow the economy.

McMillan sings the praises of devolution.It is a financial constitutional disaster. For example, how does she justify our receiving our 800m a year Barnett share of the proceeds of the 2003 1 per cent National Insurance Contribution hike, and the adverse effects on our economy, when the increase was required for reforms in the English NHS? And is she aware that our council tax increase of 60 per cent plus under devolution made up for some of the squeeze on our block grant caused by the Barnett formula?

What we need is fiscal autonomy - then we could arrange our affairs according to what we require, and recycle the proceeds for the benefit of the whole of our economy.

DOUGLAS R MAYER

Thomson Crescent

Currie, Midlothian

IN ALL the analysis of the upcoming cuts, one factor seems to have been passed over - Holyrood's right to raise income tax by 3p in the pound. It is understandable that the coalition at Westminster would fight shy of such an income tax rise, but it is hard to see any equivalent ideological imperative in Scotland. Or, might a tax rise be the Scottish Government's plan already, underpinning the raft of recent spending commitments?

MORAY GRIGOR

Craighouse Avenue

Edinburgh