Full Fiscal Autonomy. Good or bad.

[judas]

Interested to hear views on this.

IFS appear certain that it would cost Scotland dear. But some disagree, suggesting it could lead to higher growth in our economy.

[lord bunberry]

Not for me. I want full independence.

[Bishop Hibee]

If it means an end to austerity I'm for it.

[Keith_M]

I'm in favour as it will give the SNP the opportunity to demonstrate whether or not we really need to "sponge off the rest of the UK", as some people suggest.

Government Figures were presented recently in The Guardian that suggested Scotland has a GDP roughly 20% higher than the UK Average. Even with revenue from Oil and Gas removed, it would still be almost exactly the UK average (actually a fraction of percentage point higher)

The fall in Oil and Gas prices was a Rod used to beat the backs of the Independence movement but does not actually stand up to scrutiny if those figures are true. The Oil price is also slowly recovering anyway, showing that these things merely fluctuate and is not a sign that Scotland's Oil Revenues have dried up forever, as some seem to be arguing.


I for one and fed up with the Sponging Scots tag and would love Scotland to be given the opportunity to prove wrong the narrow minded and uninformed.

[Colr]

I'm all for it. If Scotland wants to pursue naive tax and spend economics it can do it with its own money instead of forcing it on the rest of the UK through a Scottish Chancellor/PM who wrecked the country's finances.

[Keith_M]

I'm all for it. If Scotland wants to pursue naive tax and spend economics it can do it with its own money instead of forcing it on the rest of the UK through a Scottish Chancellor/PM who wrecked the country's finances.


Are you of the opinion that Scotland sponges off the rest of the country?


If so, what are your thoughts on the figures I posted above?

[Colr]

Are you of the opinion that Scotland sponges off the rest of the country?


If so, what are your thoughts on the figures I posted above?

Scotland just about pays its way. The rest of the UK sponges off London and the Southeast.

[DaveF]

Scotland just about pays its way. The rest of the UK sponges off London and the Southeast.

All good then, let's do it. God help the rest of the UK when London and the South East eat themselves to death.

[Keith_M]

Scotland just about pays its way. The rest of the UK sponges off London and the Southeast.


London and the South East is the most subsidised area of the UK. The area receives far more than it's fair share of government spending.

An argument could be made that they are the ones sponging off the rest of the country..

[Pretty Boy]

London and the South East is the most subsidised area of the UK. The area receives far more than it's fair share of government spending.

An argument could be made that they are the ones sponging off the rest of the country..

24 times more spent on infastructure per resident in London and the South East than in North East England.

Spongers.

[stoneyburn hibs]

Full fiscal autonomy for Scotland will be a step closer to Independence, a big fat yes with bells on for me.

[Hibby Bairn]

London and the South East is the most subsidised area of the UK. The area receives far more than it's fair share of government spending.

An argument could be made that they are the ones sponging off the rest of the country..

We can't all be getting subsidised. Somewhere must be paying for it.

I would think it would be London and SE.

[Colr]

London and the South East is the most subsidised area of the UK. The area receives far more than it's fair share of government spending.

An argument could be made that they are the ones sponging off the rest of the country..

Only if you don't consider that it generates more that it receives.

[grunt]

Anyone who spends any time working in London, and who sees the millions travelling to work on overcrowded tubes, trains and buses, trains which I might add are packed until the last ones leave at night, and who sees hotels sold out night after night, cinemas, theatres, bars and restaurants packed all night every night, shopping centres similarly packed with people spending like there's no tomorrow, plus the hundreds of thousands of tourists staying in London and spending their dollars and yen at all the tourist venues, will understand just how hot the London economy is, and how much it must generate for the UK economy.

Compare that to Princes Street, empty at 10pm every night every month except August.

[RyeSloan]

London and the South East is the most subsidised area of the UK. The area receives far more than it's fair share of government spending. An argument could be made that they are the ones sponging off the rest of the country..

Figures are a couple of years old but this would suggest your statement is totally inaccurate
http://www.thisismoney.co.uk/money/news/article-2100345/Londons-taxes-prop-rest-UK-One-pound-earned-capital-funds-rest-country.html

Interesting that Scotland ends up about even with oil revenues netting off the fiscal transfer...that would suggest on paper at least that the UK government could introduce full fiscal autonomy and cancel Barnett and end up net neutral on the £ cost...

[lord bunberry]

Anyone who spends any time working in London, and who sees the millions travelling to work on overcrowded tubes, trains and buses, trains which I might add are packed until the last ones leave at night, and who sees hotels sold out night after night, cinemas, theatres, bars and restaurants packed all night every night, shopping centres similarly packed with people spending like there's no tomorrow, plus the hundreds of thousands of tourists staying in London and spending their dollars and yen at all the tourist venues, will understand just how hot the London economy is, and how much it must generate for the UK economy.

Compare that to Princes Street, empty at 10pm every night every month except August.
There's nothing on Princes Street to attract anyone at 10pm, the shops are all closed.

[CB_NO3]

There is two ways to look at the argument. London will subsidise a lot of the UK from the corporation and other business tax that it makes in the city. On the other side, a worker paying two grand tax in London is getting much more for his money in return, compared to a guy from Sunderland paying two grand.

[Peevemor]

Figures are a couple of years old but this would suggest your statement is totally inaccurate
http://www.thisismoney.co.uk/money/news/article-2100345/Londons-taxes-prop-rest-UK-One-pound-earned-capital-funds-rest-country.html

Interesting that Scotland ends up about even with oil revenues netting off the fiscal transfer...that would suggest on paper at least that the UK government could introduce full fiscal autonomy and cancel Barnett and end up net neutral on the £ cost...

What isn't clear in those figures is how much of the money made in London originates in other parts of the UK. If the North East's power bills (for example) were paid to companies headquartered in Newcastle as opposed to London, would the deficit remain the same?

[Fergus52]

A Scottish economic think tank thinks it could potentially double our economy.

http://www.businessforscotland.co.uk/scottish-economy-could-double-with-fiscal-autonomy/

I know the article is written by a pro-independence website but it sells the arguments quite well

[southfieldhibby]

In principle I think it's a good idea, but I have a few question.

Does FFA include excise duties and VAT? I've never seen a breakdown on VAT in Scotland/England terms as it's a pain for companies and they don't bother their arse? I've read somewhere that the Scotland contribution exceeds the per capita contribution by some way?

How would Scotland borrow? Would we get a % of gold reserves to borrow against?

Some things would be kept by Westminster, defense and foreign policy being the obvious.Scotland would pay a % of DoD spending, but what about funding Trident renewal? No chance SNP would agree to contribute to that.What if we go to war and Holyrood votes against, but we're obliged to contribute?

[Geo_1875]

In principle I think it's a good idea, but I have a few question.

Does FFA include excise duties and VAT? I've never seen a breakdown on VAT in Scotland/England terms as it's a pain for companies and they don't bother their arse? I've read somewhere that the Scotland contribution exceeds the per capita contribution by some way?

How would Scotland borrow? Would we get a % of gold reserves to borrow against?

Some things would be kept by Westminster, defense and foreign policy being the obvious.Scotland would pay a % of DoD spending, but what about funding Trident renewal? No chance SNP would agree to contribute to that.What if we go to war and Holyrood votes against, but we're obliged to contribute?

No. There are none. They're gone. Broonie sold them off. Lost a lot of money doing so.

[snooky]

No. There are none. They're gone. Broonie sold them off. Lost a lot of money doing so.

What a hero.
:fibber:

[southfieldhibby]

No. There are none. They're gone. Broonie sold them off. Lost a lot of money doing so.

Is that correct or just one of those internet rumours? I know he sold off some, but only a small % iirc?

[Peevemor]

Is that correct or just one of those internet rumours? I know he sold off some, but only a small % iirc?

More than half. Clown!

http://en.wikipedia.org/wiki/Sale_of_UK_gold_reserves,_1999%E2%80%932002

[Just Alf]

More than half. Clown!

http://en.wikipedia.org/wiki/Sale_of_UK_gold_reserves,_1999%E2%80%932002

That's a bit off speaking to a fellow PM like that! :bitchy:









:greengrin

[Jonnyboy]

No. There are none. They're gone. Broonie sold them off. Lost a lot of money doing so.

Never the same after he left us to join Celtc :greengrin

[southfieldhibby]

More than half. Clown!

http://en.wikipedia.org/wiki/Sale_of_UK_gold_reserves,_1999%E2%80%932002


That's a bit off speaking to a fellow PM like that! :bitchy:









:greengrin

I resemble that remark :greengrin

[Colr]

More than half. Clown!

http://en.wikipedia.org/wiki/Sale_of_UK_gold_reserves,_1999%E2%80%932002

Was that before or after he raided everyones pensions?

[southfieldhibby]

Another genuine question.


Excise duties are paid based on the port they leave The UK from, yes? So all the whiskey from Scotland that leaves Felixstowe or Harwick or wherever doesn't touch the Scottish economy just now.The taxation on the Whiskey is also paid based on where the head office is too, yes? Diageo are based on London and the ports used to export are also not in Scotland.Am I correct so far? And the VAT on all whiskey sold/consumed in Scotland also goes to London and not attributed to the economy of Scotland? Same applies to all peeve produced in Scotland, all food stuff etc.

What about Asda or Next or B&Q? None of them have head offices in Scotland, so none of them pay tax on profits in Scotland, let alone VAT.

So this financial deficit Scotland runs ( and we do run a deficit, I accept that) doesn't take these considerations into eh, consideration, does it?

[Keith_M]

Another genuine question.


Excise duties are paid based on the port they leave The UK from, yes? So all the whiskey from Scotland that leaves Felixstowe or Harwick or wherever doesn't touch the Scottish economy just now.The taxation on the Whiskey is also paid based on where the head office is too, yes? Diageo are based on London and the ports used to export are also not in Scotland.Am I correct so far? And the VAT on all whiskey sold/consumed in Scotland also goes to London and not attributed to the economy of Scotland? Same applies to all peeve produced in Scotland, all food stuff etc.

What about Asda or Next or B&Q? None of them have head offices in Scotland, so none of them pay tax on profits in Scotland, let alone VAT.

So this financial deficit Scotland runs ( and we do run a deficit, I accept that) doesn't take these considerations into eh, consideration, does it?


I'm not sure if it helps but VAT on Whisky is payable at the point it leaves a Bonded Warehouse.

[CropleyWasGod]

Another genuine question.


Excise duties are paid based on the port they leave The UK from, yes? So all the whiskey from Scotland that leaves Felixstowe or Harwick or wherever doesn't touch the Scottish economy just now.The taxation on the Whiskey is also paid based on where the head office is too, yes? Diageo are based on London and the ports used to export are also not in Scotland.Am I correct so far? And the VAT on all whiskey sold/consumed in Scotland also goes to London and not attributed to the economy of Scotland? Same applies to all peeve produced in Scotland, all food stuff etc.

What about Asda or Next or B&Q? None of them have head offices in Scotland, so none of them pay tax on profits in Scotland, let alone VAT.

So this financial deficit Scotland runs ( and we do run a deficit, I accept that) doesn't take these considerations into eh, consideration, does it?
What is this whiskey you speak of?[emoji48]

I have no idea how the supposed FD is worked out when it comes to tax receipts. There is a general rule, though, in tax law that activity is taxable in the country in which it occurs.

In the event of FFA, therefore, Revenue Scotland would tax the Scottish branches of Next etc.

[liamh2202]

What is this whiskey you speak of?[emoji48]

I have no idea how the supposed FD is worked out when it comes to tax receipts. There is a general rule, though, in tax law that activity is taxable in the country in which it occurs.

In the event of FFA, therefore, Revenue Scotland would tax the Scottish branches of Next etc.

Do you not think making things complicated for companies would make them want to take their business elsewhere?

[CropleyWasGod]

Do you not think making things complicated for companies would make them want to take their business elsewhere?
Don't see what the complication for companies would be. The bigger ones would have the facility to report their Scottish results separately. The smaller ones would have to accept whatever method RS imposed.

Why would they want to give up profitable outlets?

[grunt]

Don't see what the complication for companies would be. The bigger ones would have the facility to report their Scottish results separately. The smaller ones would have to accept whatever method RS imposed.

Why would they want to give up profitable outlets?

If I may be so bold that seems a very simplistic approach, especially from an accountant. So for retail businesses it may be straightforward to calculate revenues, but how would someone like Next calculate profits? You're asking them to allocate costs of sale across all their regional stores - who's going to check that?

And what about non retail businesses? Where does someone like Standard Life make sales from? Is their business run from Scotland or London? What about the banks - where does their profit come from? Is a loan made in London to a Scottish business revenue for London or Scotland?

It seems hellishly complex to me.

[marinello59]

Do you not think making things complicated for companies would make them want to take their business elsewhere?

The bottom line is all that counts. If they are making money in Scotland why would they leave?

[CropleyWasGod]

If I may be so bold that seems a very simplistic approach, especially from an accountant. So for retail businesses it may be straightforward to calculate revenues, but how would someone like Next calculate profits? You're asking them to allocate costs of sale across all their regional stores - who's going to check that?

And what about non retail businesses? Where does someone like Standard Life make sales from? Is their business run from Scotland or London? What about the banks - where does their profit come from? Is a loan made in London to a Scottish business revenue for London or Scotland?

It seems hellishly complex to me.
The retail sector is relatively simple, even for cost of sales. The larger companies already have (or should have) accounting systems that can identify profitability by branch,and hence by country.

As for checking, that's the job that internal audit already does. The reporting to RS would be on the self assessment basis that currently exists, with all the review and enquiry processes that HMRC already use.

Non-retail business is perhaps more complicated, but of course SL and the likes will have the records to allocate income. Expenditure might be more difficult, but hardly enough to dissuade businesses from actually being here, which is the point that I was arguing against.

If a UK company makes a sale to France, it's taxed in the UK. If a Scottish company (one that operates here, like SL) makes a sale to England, it therefore follows that it would be taxed in Scotland.

[grunt]

Sorry but I don't agree. Profit by branch will be calculated as a contribution towards overheads, and may include direct costs, but there will remain a huge amount of central costs which will need to be allocated in some way eg procurement, company admin costs, head office costs etc. there is huge scope for large organisations to arrange their business so that profits arise in the low tax regions - as the likes of Amazon and Starbucks do already.

And I'm sure there are many large corporate financial sector and even oil and gas companies for who the decision about where a sale is made, and how much profit to attribute, will be a complicated and subjective calculation.

Not to mention the cost of setting up a whole new tax and fiscal infrastructure. Has anyone estimated the cost of this?

[grunt]

If a UK company makes a sale to France, it's taxed in the UK. If a Scottish company (one that operates here, like SL) makes a sale to England, it therefore follows that it would be taxed in Scotland.

Not if the sale was generated from their English offices? SL have operations in London don't they?

[CropleyWasGod]

Sorry but I don't agree. Profit by branch will be calculated as a contribution towards overheads, and may include direct costs, but there will remain a huge amount of central costs which will need to be allocated in some way eg procurement, company admin costs, head office costs etc. there is huge scope for large organisations to arrange their business so that profits arise in the low tax regions - as the likes of Amazon and Starbucks do already.

And I'm sure there are many large corporate financial sector and even oil and gas companies for who the decision about where a sale is made, and how much profit to attribute, will be a complicated and subjective calculation.

Not to mention the cost of setting up a whole new tax and fiscal infrastructure. Has anyone estimated the cost of this?
I don't think any of that is beyond the capabilities of larger companies. That's what management accountants do, after all :)

It does strike me.....and this is not a pop at you;I've no idea what your views are on devolution and independence......that the "too difficult " argument will be used a lot by opponents of FFA.

[CropleyWasGod]

Not if the sale was generated from their English offices? SL have operations in London don't they?
If the English office generates it, it's an English sale. That's the gist of what i was trying to say earlier.

[liamh2202]

Would online sales also need separated into regions?

[liamh2202]

The bottom line is all that counts. If they are making money in Scotland why would they leave?

I agree if they are making lots of profit I suppose it would be worth it for them

[JeMeSouviens]

The elephant in the FFA room is Barnett.

Scotland's revenue ex-oil is 97% of the UK average. Including oil therefore, it's almost certain to be higher in almost all years. According to Deutsche Bank (https://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000350394/Better+off+on+their+own%3F+Economic+aspects+of+reg io.pdf), currently around 115%.

But ...

Scotland's public spending is approximately £1600 per head higher than the rest of the UK. Contrary to myth, this has nothing to do with greater need in Scotland or sparsity of population or anything other clever multiplier. The Barnett formula gives us more money by accident. It's supposed to be proportional to population size, but this is according to estimates of the population done in the 70s. The estimates weren't great then and have since become much worse, because England's population has grown much faster than ours. It is effectively a bribe, UK politicians are too scared to change it as they know that economic considerations were the key driver behind the No vote.

So, Scotland (notionally) runs a deficit significantly higher than the UK as a whole, but only for as long as the UK is prepared to bribe us to keep us in the Union. If our public spending was reduced to the UK average and we assigned ourselves oil revenue, we would undoubtedly be in a better net fiscal position than rUK and we really could treat oil as a bonus.

That's the short term. In the long term, who knows? There are a myriad of factors but essentially we are well placed and the argument that we will run our own economy in a more locally prioritised way to benefit business based here makes sense to me.

I can't see the Tories maintaining Barnett in the long term. They have just run an election based on stoking up English resentment of the unfairness of Scottish votes on UK legislation. Admittedly they kept fairly quiet about the money side of things, but a UK government that promised to equalise public spending across the UK would undoubtedly be popular in England. It's only a matter of time, and let's face it, it actually would be fairer.

[HUTCHYHIBBY]

Another genuine question.


Excise duties are paid based on the port they leave The UK from, yes? So all the whiskey from Scotland that leaves Felixstowe or Harwick or wherever doesn't touch the Scottish economy just now.The taxation on the Whiskey is also paid based on where the head office is too, yes? Diageo are based on London and the ports used to export are also not in Scotland.Am I correct so far? And the VAT on all whiskey sold/consumed in Scotland also goes to London and not attributed to the economy of Scotland? Same applies to all peeve produced in Scotland, all food stuff etc.

What about Asda or Next or B&Q? None of them have head offices in Scotland, so none of them pay tax on profits in Scotland, let alone VAT.

So this financial deficit Scotland runs ( and we do run a deficit, I accept that) doesn't take these considerations into eh, consideration, does it?

Is there any whiskey distilled in Scotland?

[Speedy]

If I may be so bold that seems a very simplistic approach, especially from an accountant. So for retail businesses it may be straightforward to calculate revenues, but how would someone like Next calculate profits? You're asking them to allocate costs of sale across all their regional stores - who's going to check that?

And what about non retail businesses? Where does someone like Standard Life make sales from? Is their business run from Scotland or London? What about the banks - where does their profit come from? Is a loan made in London to a Scottish business revenue for London or Scotland?

It seems hellishly complex to me.

It is. It's a pain in the arse but it's doable.

[Just Alf]

It is. It's a pain in the arse but it's doable.

Yup, any company currently operating in more than one country is already doing the needful, they "just" need to stick some extra lines into their spreadsheets :agree: ..... Bit harder for a wee alarm company, or butchers chain and the like who operate across the UK but not internationally.... They'd learn though, it's amazing what computers can do these days :greengrin

[Just Alf]

The elephant in the FFA room is Barnett.

Scotland's revenue ex-oil is 97% of the UK average. Including oil therefore, it's almost certain to be higher in almost all years. According to Deutsche Bank (https://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000350394/Better+off+on+their+own%3F+Economic+aspects+of+reg io.pdf), currently around 115%.

But ...

Scotland's public spending is approximately £1600 per head higher than the rest of the UK. Contrary to myth, this has nothing to do with greater need in Scotland or sparsity of population or anything other clever multiplier. The Barnett formula gives us more money by accident. It's supposed to be proportional to population size, but this is according to estimates of the population done in the 70s. The estimates weren't great then and have since become much worse, because England's population has grown much faster than ours. It is effectively a bribe, UK politicians are too scared to change it as they know that economic considerations were the key driver behind the No vote.

So, Scotland (notionally) runs a deficit significantly higher than the UK as a whole, but only for as long as the UK is prepared to bribe us to keep us in the Union. If our public spending was reduced to the UK average and we assigned ourselves oil revenue, we would undoubtedly be in a better net fiscal position than rUK and we really could treat oil as a bonus.

That's the short term. In the long term, who knows? There are a myriad of factors but essentially we are well placed and the argument that we will run our own economy in a more locally prioritised way to benefit business based here makes sense to me.

I can't see the Tories maintaining Barnett in the long term. They have just run an election based on stoking up English resentment of the unfairness of Scottish votes on UK legislation. Admittedly they kept fairly quiet about the money side of things, but a UK government that promised to equalise public spending across the UK would undoubtedly be popular in England. It's only a matter of time, and let's face it, it actually would be fairer.

Maybe they could move the Scottish border in the North Sea a bit further south... That would help as well! :aok:




:wink:

[Peevemor]

Maybe they could move the Scottish border in the North Sea a bit further south... That would help as well! :aok:




:wink:

Westminster has previous in moving maritime boundaries to the benefit of England (and it's not just fish that are at stake).

http://news.bbc.co.uk/2/hi/uk_news/scotland/480352.stm

[Just Alf]

Westminster has previous in moving maritime boundaries to the benefit of England (and it's not just fish that are at stake).

http://news.bbc.co.uk/2/hi/uk_news/scotland/480352.stm


Yup, imagine thinking that Perth/Dundee should be about the right place to draw the border between Scotland and England in the North Sea... What were they thinking??? :confused:


Mind you, if the North of England do decide to come with any future independent Scotland it would be a moot point!

[southfieldhibby]

http://www.theguardian.com/politics/2015/may/26/landlords-14bn-tax-breaks-buy-to-let-expansion-mortgage-interest

£14B PA.Our share would go a wee way to closing that deficit figure if allowed, because lets face it, no are a Tory govt closing that loophole at WM.

[RyeSloan]

http://www.theguardian.com/politics/2015/may/26/landlords-14bn-tax-breaks-buy-to-let-expansion-mortgage-interest £14B PA.Our share would go a wee way to closing that deficit figure if allowed, because lets face it, no are a Tory govt closing that loophole at WM.

I'm 100% positive the government will be eyeing this tax break as a source of income...they should go further as the economist recently pointed out and cut the tax break on debt interest payments as well for all business. Quite why debt interest is seen as a sacrosanct tax break I have no idea. Chop corp tax but remove debt interest relief would be my way forward...simplifies a hell of a lot and removes the insane incentive to load companies with debt. Probably far too sensible to ever be considered of course!