Letter: Fiscal devolution

Joan McAlpine (Comment, 25 August) described our proposal for a transfer of significant fiscal competence to the devolved Scottish Government as radical.

That is certainly true in the UK context, but less so when compared with the devolved fiscal regimes already operating very successfully in a number of countries including Spain, Switzerland, Canada, Germany and Belgium. Indeed, we go further. Our contribution sits very comfortably with the arguments for fiscal policy devolution made by the Steel Commission in its report of 2006.

It is important to stress that our proposal was informed by economic rather than political or constitutional considerations.

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Our central argument is that only with a significant transfer of fiscal responsibility will a Scottish Government acquire the economic policy levers necessary to fundamentally improve the rate of economic growth in Scotland; and in so doing have the means and capacity to resolve the deep-seated economic and social challenges we face - including, most immediately, those associated with the ongoing fiscal crisis.

The Calman tax proposals for sure will not achieve this. Indeed, the opposite is likely to be the case. Under Calman many businesses will have to absorb the added cost of lodging a supplementary PAYE return for those of its employees residing in Scotland, as well as pay higher taxes to cover the costs of collecting those taxes.

But there will be no offsetting benefits to these firms in the form of higher growth or an improved economic environment that would result if Scotland's government had the appropriate fiscal policy levers at its disposal.

While many aspects of the debate that followed the publication of the Calman Commission tax proposals have puzzled us, few have been more bewildering than the readiness of parts of the business community in Scotland - including the CBI - to unreservedly endorse Calman's income tax proposals which will simply add another layer of costs and red tape to their activities, and from which they will benefit not at all.

(Professor) Andrew Hughes Happett

University of St Andrews

(Professor) Drew Scott

University of Edinburgh