DR John Cameron (Letters, October 8) repeats the simplistic claim that when the Scottish Government gets significant new powers, it can improve current benefits or create new ones simply by raising tax rates or making savings elsewhere. But it is not as simple as that.
At present almost all taxes raised in Scotland go straight to the London Treasury, and a much smaller amount (about 60 per cent) is returned in the form of an annual grant. The difference is retained to meet Scotland’s proportionate share of UK costs such as security and defence, interest on the national debt, and social benefits like pensions and welfare paid in Scotland. But most people have been brainwashed into believing that the Barnett Formula annual grant is simply a subsidy to Scotland from English taxpayers, when the truth is that we are simply being handed back some of what money was raised in Scotland originally.
The minimal taxation benefits provided in the 2012 Act, based on the Calman Commission recommendations, have not yet actually been transferred. Instead the Scottish Finance Minister is working within an annual budget which has been reducing every year since 2010 because of the effect of UK-imposed austerity cuts. But unlike George Osborne at the Treasury, Mr Swinney has succeeded in keeping Scotland’s public spending within every annual budget since then.
When the decreed proportion of Calman income tax is transferred back by HMRC next year, the annual amount of the Barnett Formula transfer will be reduced proportionately, so the net effect on Scottish Government income will be nil. A similar Barnett reduction will be imposed when the Smith Commission proposals currently going through Westminster are put in place, perhaps around 2019 or 2020.
So again any increase in income tax rates imposed by the Scottish Government (of whatever persuasion) will not actually produce any extra revenue to pay for improved or new benefits. It is all just smoke and mirrors, in effect just transferring the blame for inadequate benefits from Westminster to Holyrood.
The only real solution is to get rid of the Barnett Formula for good. Instead all tax revenues raised in Scotland should remain in Scotland, and all public spending should be the responsibility of the Scottish Government. A negotiated annual amount would be paid to the Treasury for UK-wide services such as defence and security, foreign affairs, and national debt interest. In other words devo-max, the very solution which David Cameron refused to allow on the referendum ballot paper last year.
Iain AD Mann,
7 Kelvin Court, Glasgow.
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