Update: Indy by another name and the danger of bad legislation
- Rushed process carries big risks of getting it wrong
- Tax changes must not be expensive and bureaucratic
Deputy first minister Nicola Sturgeon is cheekily pushing the Smith Commission to give the Scottish Parliament a form of independence-lite.
But in this rush to get what the referendum denied the Yes campaign there is a risk of getting it wrong.
As the old saying goes, act in haste, repent at leisure. Those cracking the whip over the three Westminster leaders to speed up the process of implementing their “Vow” are in danger of ruining their best chances of a viable and acceptable settlement. Having lost the independence vote they will inevitably push for the maximum possible version of devo max. Whatever shape this takes it must be realistic, cost-effective and beneficial.
There is a long list of bad legislation that followed hysterical demands that “something must be done”. In some cases it required repeal or reform.
The last thing Scotland’s parliament needs is a new set of powers that fall short of effective control or which do not provide adequate protection and regulation to ensure they do not deny rights and safeguards to citizens. New powers must be proportionate and must also protect the interests of minorities.
Sturgeon has issued a long list of new taxes she wants to take from Westminster from air passenger duty to VAT. It leaves little doubt that this is an attempt at a form of independence by the back door.
The new powers thus far offered will extend mainly over tax raising and welfare – big areas that require careful consideration and preparation. Scotland cannot afford to be saddled with a tax system that is no better than the one it is disinheriting. It will be a difficult and laborious process to introduce any sort of change and so it is necessary to ensure it is not made any more expensive and complex to make it effective.
For that reason alone, changes to the tax system should deal with those matters which cause least disruption to businesses. The recent case involving Ireland and Apple Corporation, in which the EU said beneficial tax rates appeared to be outwith the rules on competition, should be a reminder to those calling for a power over corporation taxes to think very carefully about what might result.
The Irish case should make it plain that any notion of creating a tax haven in Scotland is no longer an option. As Iain McMillan, the now retired head of CBI Scotland, told me recently there is a danger that creating a differential corporation tax rate – as the SNP wants – would risk allowing companies to switch their taxable profits to the lowest jurisdiction. It would be a “race to the bottom” with no winners.
Business organisations will also be submitting their ideas and it can be assumed that in the main they will urge any change to be kept to a minimum and in the best interests of maintaining as much unity across the UK as possible, particularly on the tax system (rates are another matter) and on regulation.
At least in Lord Smith, the commission is in the best possible hands. He will not shirk from issuing warnings of possible dangers or concerns and ensuring the process is handled with the sort of due diligence the country requires.