Monday, 22 June 2009

Calman: A Taxing Question?

And so it comes down to tax. It always does. Even before its birth, the Scottish Parliament was defined not only by its ability to close the democratic deficit with Westminster but also by its power to raise, or lower, taxation.

Tony Blair’s political masterstroke of including a question on the Tartan Tax in the devolution referendum ensured, amidst howls of political protest (but crucially with the consent of the people) that the Scotland Bill would pass unhindered through the House of Lords.

Is Calman a similarly brilliant power play? Will the proposal to raise the tax varying power from 3p in the pound to 10p (half the Income Tax rate) have a similar political impact, stabilising the next decade of devolution? Will the direct link between representation and taxation finally kill off Independence?

On the plus side, the recommendations from this cross (unionist) party group hit the right notes, at least when judged against the original Westminster score for devolution. Yes, additional tax powers will bring greater responsibility for our MSPs, although this proposal falls way short of fully proportionate tax & spend.

If the fiscal mechanism of taking a slice of the Barnett cake at source and forcing our MSPs to levy it back, or keep marginal tax rates low relative to the rest of the UK, is designed to bring greater responsibility and accountability then it could succeed. Although we’re not going to see a radical tax reduction as public finances are squeezed.

But why should our MSPs suddenly find this greater ability to vary tax any more appealing than before? The 3p variation has never even been seriously debated, let alone implemented. What chance a game-changing10p tax reduction? Nil.

The other changes proposed by the Calman Commission, such as greater power for our MSPs - to lower speed limits, to reduce legal alcohol levels for driving and to cut the amount of airguns in circulation - will no doubt be welcomed by all political parties.

But does this need to revert to legislation when education and positive encouragement fail, demonstrate an active, healthy, participative democracy? Or, does recourse to the law in order to force social behavioural change betray a more fundamental breakdown of trust between the elected and the electorate?

Since the Calman Commission was established just over a year ago the public has become increasingly detached from our expenses-scandalised MPs (whilst being denied the opportunity to kick them out)! Public trust in our politicians has broken down to dangerously anti-democratic levels.

Although the parties, whether through Calman or in their forthcoming party manifesto commitments, are beginning to move on this, none of them appear to have grasped that instead of tinkering with the existing political settlement it needs turned on its head.

Our political class needs to give power back to the people, for example through stronger local democracy, proportional representation (not the pretend variety called AV), and greater public involvement in the design and delivery of public services.

It is against this backdrop that Calman must be seen. A new “devolution default” position is beginning to emerge amongst the electorate and it can be summed up thus: unless there is a compelling national interest not to, all power should be devolved.

Calman is not putting us on a motorway to independence. Neither is it a lasting defence of the Union. This particular road less travelled is to a different place. It is called Federalism. Can our politicians grasp that?

Now that really is a taxing question!

Ross Martin
Policy Director


  1. Calman was a panic response to the new Scottish Government's National Conversation, one of which I attended last week and was impressed. Giving further powers on taxation will only increase the divide between Scotland and the rest of thr UK. Who, in their right mind would increase income tax by 10p - unless perhaps the Norwegian government; but then, the Norwegians know that they will be the beneficiaries of such an increase, In our case, it would go down a black hole, as most of the UK reserves seem to have done over the past 10 years.
    No, the next logical step is not Calman, but a reconfiguration of the UK, with an independent Scotland being responsible for its own finances and decisions - the ultimate fiscal autonomy.
    It's the economy, stupid!

  2. Independence - "the next logical step"? One small step for political activists one giant leap for a disengaged public! Surely you concede that a federal system can accommodate full fiscal autonomy if built upon the democratic principles of devolution, with power sitting at the most appropriate level.

    I'm not a fan of the policywonk descriptor "subsidiarity" as it infers the type of sub-ordination inherent in the current UK settlement and not a partnership of equals as practised in proper, grown up federal states.

    Of course its the economy, stupid and in these turbulent times when there are choices to be made at the fork in the fiscal road perhaps we should consider where we wish to be in a few years time and wonder whether we will be able to follow Robert Frost's wise words:

    "I shall be telling this with a sigh
    Somewhere ages and ages hence:
    Two roads diverged in a wood, and I—
    I took the one less travelled by,
    And that has made all the difference."