Report: A Scottish Tax System - Imagining the Future

Richard Murphy argues for an independent Scotland’s tax policy to be effective a Scottish currency is needed from “day one”

AN independent Scotland can create a fair and effective tax system if it overhauls the UK approach to taxation, renowned tax expert Richard Murphy argues in a new paper for Common Weal, the most comprehensive of its type to date.

‘A Scottish Tax System: Imagining the Future’ is part of the Common Weal’s White Paper Project developing a new case for an independent Scottish state, and can be read in full here

The report shows that an independent Scotland could fix the inefficiencies and large scale abuses of the UK tax system if it took an entirely different approach, creating a system that works better for Scotland’s economy and society.

 Key points in the report include:

·      The taxation system must be based on mutual trust between citizens, and the principles of a Scottish independent tax system should be based on the Universal Declaration of Human Rights.

·      A Scottish independent currency is necessary for an effective tax system because sovereign money creation from a Scottish Central Bank will allow tax to play its proper role in the modern economy: to control inflation, ratify the value of the currency, reorganise the economy, redistribute income & wealth, reprice goods & services and raise democratic representation. In short, tax with a Scottish currency would not be used to fund spending but to meet an independent Scotland’s macroeconomic goals.

·      New systems must be established for a Scottish tax system which operate differently from that of HMRC: a more representative and democratic governance structure, more accurate data collection, better resourced and staffed tax administration with a local network throughout Scotland (reversing current HMRC job losses), and laws that prohibit largescale tax avoidance and close down opportunities for tax evasion.

·      Changes to tax policy for almost every current UK tax is proposed to make them more efficient and effective, as well as the introduction of new taxes including a Carbon Usage Tax and Financial Transactions Tax.

“What is so important about this paper is that it shows quite clearly that if you were going to set up a new tax system you definitely wouldn’t replicate the current British system which is riddled with problems.” Robin McAlpine

Murphy, who directs Tax Research UK and is professor of International Political Economy at City University, said of the report: "A country's tax system reflects its core values. Who it taxes, in what amount and with what goal is the best indication there is of what it thinks important. The technicalities are important, of course, but if Scotland is to get the society and economy it wants then the debate on how it will tax can't be left to experts. This is an issue for anyone who wants Scotland to be a better and stronger country."

Robin McAlpine, Common Weal Director, said of the report: “What is so important about this paper is that it shows quite clearly that if you were going to set up a new tax system you definitely wouldn’t replicate the current British system which is riddled with problems. It shows that a new Scottish tax system could have very real and tangible benefits, but it also begins to show that it is perfectly achievable. This is the first time there has been a thorough examination of what an independent Scottish tax system would have to deal with and what it might look like. I suspect this will be attractive to an awful lot of people.”

Ben Wray, Common Weal head of policy, said of the report: "Richard Murphy is one of the UK's foremost expert’s on tax issues. This Common Weal report - which is a fully comprehensive study of a prospective independent Scotland's tax system - is therefore a major landmark publication in the Scottish independence debate.

"The report shows that tax is an essential mechanism for government to meet social and economic goals, and that a fair and effective tax system after independence requires an independent Scottish currency to go with it. It should be essential reading for anyone who wants to renew and update the case for Scottish independence."



Wed, 08/30/2017 - 08:28

There is no doubt we need to avoid a carbon copy of the UK tax system. Fairness that's seen by all as fairness in the new system is essential. That acceptance of fairness means less motivation to try and cheat on tax.


Wed, 08/30/2017 - 13:29

This is an excellent paper that recognises what money is and how it is created, but more importantly that taxes come after spending and are not the source of that spending. I have admired Richards Murphy's work in the area of fair and meaningful taxation for many years, and am delighted that he is helping Common Weal in their series of excellent White Papers.
I sincerely hope that the Scottish Government are paying attention to these matters and learning something about sovereign currencies and the real purposes of taxation outlined here.
Here is some light in the darkness of economic ignorance.


Wed, 08/30/2017 - 13:50

I read in the Guardian how the SNP handed Donald Trump a £110,000 tax rebate "as part of an emergency bailout intended to help struggling small businesses".

Curiously, Common Space never got around to reporting on it, but you can read it in The Guardian:

I don't think many Scots will be in favour of giving such people the power to design a radically different tax system that will reach into every corner of our lives. And you certainly cannot read that Guardian article and come away with the impression that they have "fairness" as their guiding principle.


Tue, 09/05/2017 - 06:29

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Tue, 09/12/2017 - 18:33

Why no mention of local taxation (council tax)?

ejfj's picture


Wed, 09/13/2017 - 21:17

You make a valid point, Mr. Bishop. I'll paraphrase it by agreeing that it is indeed distasteful to discover that we have subsidized Donald Trump in any way. For the rest, though...

What is not obvious from the Guardian's headline is that ALL businesses in the sector in Scotland got the rebate. From the article you cite: "Only available to firms in the hospitality sector, the rebate was put into effect Scotland-wide, and included companies making profits or those unaffected by the economic downturn."

As I am sure you are aware, Corporation Tax is a reserved matter. If Corporation Tax were devolved to the Scottish Government, it would have been able to adopt a much more discriminating approach. So, if you wish to attribute blame for subsidizing the current POTUS, you should attach it instead to the Westminster regime, which was responsible for not granting the Scottish Government the appropriate powers, nor providing the necessary assistance and data, to enable it to take a more targeted, more goal-oriented, and possibly less expensive approach.

I note in passing that Northern Ireland has had corporation tax devolved to it - which won't do them much good if Stormont isn't working, I suppose - but then they've also just got a billion-pound bung which I am sure makes up for it.

Even though £110,000 or so to Trump with no quo for the quid sticks in most people's craw, it is as nothing compared to the $17 million he managed to extract from an insurance company for non-existent hurricane damage at Mar a Lago. This is another reason to be glad we don't have hurricane-force winds in Ayrshire very often! My apologies for the digression: my point is that Trump is probably soaking the rest of us for much more than that £110k; we just don't know about it, because (I assume) he has an army of accountants and lawyers working for him to make sure he doesn't get caught.

Even though we'll never get a "Thank you" out of Trump, there must be many businesses in the sector in Scotland, that we could all agree are "deserving", which are truly grateful for their continued existence. It is also, of course, sound economics - if you are not an extreme economic neoconservative / neoliberal - for governments to spend during economic downturns, as damage mitigation.

Without the necessary economic data and powers, and lacking any significant ability to borrow, there is not much else the Scottish Government could have done. If someone has a better idea, I am sure we would all like to hear it.

We are all well aware, of course, that to have done nothing would also have attracted the usual howls of ESSEMPEEBAD - but at least this way, some businesses get to survive that otherwise would not have, and that means real people with real lives earning real money in a real economy, and paying real taxes, even if Trump manages to squirrel his way out of paying his.

Another way of looking at this Trump business is, of course, to point to it as yet another example of a glaring shortcoming in the way Westminster does our taxes. There would be no objection from any of us independentistas, I am sure, to a new taxation system that would prevent Trump and his soulmates from exploiting the rest of us and riding roughshod over our rights and wellbeing, by preventing the wealthiest from indulging their well-known appetite for avoiding and evading paying any tax at all if they can possibly get away with it.

I remember Trump saying at one point - in relation to non-payment of tax in the US, at that point - that paying tax is for "losers". We can probably do without people like that in our society, and where we have them, they need a close eye keeping on them.


Sun, 09/17/2017 - 12:53

Can someone get rid of the spell caster ads? They're doing ma head in.


Wed, 09/27/2017 - 06:22

Can one of these spellcasters do something to resurrect discussion of local taxation. For most lower rate tax payers this accounts for at least a quarter to third of the tax they pay. So seems odd to me that this paper and surrounding discussions don’t expressly make any mention of council tax reform. A tax which all appear to agree is flawed in its current form but no one (within SNP) seems willing or able to suggest a replacement for.

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