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."