Politicians need to be clear about cuts

However, what he signally failed to do was to explain how the adverse financial consequences of these provisions on Scotland's budget would be addressed.

According to Treasury forecasts, income tax receipts for the current financial year are expected to decline by 8 per cent. As Calman requires part of the current block grant to be replaced by an assigned share of Scotland's income tax receipts, the unavoidable consequence of this recession-induced fall in Scotland's income tax receipts would have been to reduce Scotland's current budget by approximately 400 million from its current level.

It is worth stressing this is a direct consequence of the Calman arithmetic, and owes nothing to the fiscal measures contained in the recent Budget or indeed any decisions following the forthcoming comprehensive spending review.

However, the recent emergency Budget also raised by 1,000 the threshold before income tax is paid and inevitably - and again unavoidably - this will lower even further gross receipts from income tax collected in Scotland. Using the Institute for Fiscal Studies data we calculate that this measure will reduce Scotland's total income tax receipts by a further 297m, one half of which (149m) would automatically be deducted from the Scottish budget under Calman.

And while the impact of the estimated 3.5bn fall in income tax revenues accruing to the UK Government due to the higher tax threshold will be offset by higher VAT revenues, none of these higher VAT revenues will accrue to Scotland.

The combined effect of the fall in income tax revenues collected in Scotland had the Calman proposals been in place during the current financial year would therefore have been to reduce the Scottish budget by in excess of 500m.

Consequently, either spending cuts in excess of those required by UK Government would have been necessary, or the rate of income tax levied in Scotland would have to have risen. And any such spending cuts would be additional to those already in the pipeline.

Professor Iain McLean of Oxford University and a member of the Calman expert group recently acknowledged that implementing Calman's proposals will indeed necessitate further cuts in Scotland's budget beyond those required by the UK coalition Government's policies under the current Barnett arrangement. Crudely put, in relative terms the Calman proposals will leave Scotland the worst hit in financial terms of all the UK's regions.

Surely it is now time for all Scotland's politicians who support Calman's financial proposals to explain where these additional spending cuts will be made, or by how much they expect Scotland's rate of income tax to increase if they are to be avoided?

DREW SCOTT

School of Law

Old College

Edinburgh University

I have come to the conclusion that the Scottish Government is economically illiterate. What part of "there is no more money, we must cut expenditure" does it not understand?

It behaves like a drunk in a bar who will not leave until he has spent his last penny. Thank goodness all local authorities and most of the quangos have ignored calls to maintain expenditure and have started making cuts in this year's budgets. To do otherwise would have meant savage cuts in 12 months' time which would have been far more damaging to their clients and customers.

It is a good job the SNP Government does not have fiscal responsibility at present as if it had I am sure we would as a nation be bankrupt by now.

JW WATT

Castle Street

Selkirk

It beggars belief that at a time when Scotland's backside is hanging out of its breeks, a writer such as David Torrance can be given space to advocate up to a 3p tax rise under the Scottish variable rate mechanism (Opinion, 1 July).

Mr Torrance's understanding of the levers to achieve economic growth appear to be wholly in line with the current, woolly thinking beloved of the far left who spend their time wondering how else they can "soak the rich".

Unfortunately, 99 per cent of the world's economists will beg to differ. It's not a difficult concept to grasp: high tax stifles growth, low tax stimulates.

The writer believes that Alex Salmond would demonstrate great leadership and strength if he took the 3p rise course. The opposite is true. Mr Salmond would show enormous courage to cut the rate by 3p and open Scotland's doors to enterprise and entrepreneurs as opposed to the inevitable wasteland so eloquently outlined by Professor Brian Ashcroft in his current report.

Mr Salmond was an economist with a major bank. For the sake of Scotland's financial future let us hope that his grasp of fundamental economics outweighs any highly dangerous political cant.

JACK IRVINE

High Timber Street

London z