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Thursday, December 15, 2016

Scotland’s future matters

So much has been telegraphed about today’s Scottish Government budget announcement that we should not expect surprises. The perception and expectation that the tax burden on Scots will rise is firmly embedded.

Trends matter and we have already seen reactions to these trends in the shortfall on domestic Land and Buildings Transactions Tax and the increasingly pained growls of the commercial property sector. The same has begun on income tax; it was revealed only yesterday that an accountancy firm has begun to talk about “tax equalisation packages” that offer salary supplements for those talented staff that they wish to retain.

We too warned in our submission to Holyrood’s finance committee on Scotland’s tax system that the idea that progressive tax rates can actually deliver fairness and equality is less than likely. Other dynamic effects will be far more powerful and be more likely to increase inequality and curtail growth.

These messages from the supply side matter. While analysis and commentary about today’s budget will follow the tired format of a circus of conjecture and Keynesian promises, the real world will continue to make its millions of decisions unknowable to politicians and generate the change that will smack them in the face with tomorrow’s unknowable events.

That lack of knowledge matters, precisely because trends do matter, and Mr Mackay’s powers do now have enough leverage to adjust trends. The principles he must follow are outlined in the blog piece below this one. For us at TaxpayerScotland they are our only source of future prosperity.

Sadly for all Scots, we fear the force of ideas and incentives in state-funded relationships that drive the Euro-centric centre-left controlling the levers of Scottish power make only one trend feasible in policy choice – more tax to fund more spending.

These are failed policy choices wherever they have been tried. In the EU especially, but also in the US where a trillion dollar deficit is on its way. Taxpayers have been duped over a long period that “government” can support their health, social and educational needs by spending other people’s money on other people. The crisis in the NHS, social care and educational attainment tells us that this is just plain wrong.

Scotland’s government is particularly unwilling to counter the spending tendency of the managerial state. Take a look at this 10 point plan from an alliance of spending interests in the social support industry. It’s not just the money that matters here, it is the embedded nature of mostly middle class professionals across a myriad of initiatives that most voters have never heard of that sticks in the craw. And the left wonder where populist politicians get their motivation for castigating the “political elite” and offering hope to “the little people” from? It’s in documents like this, stupid, demanding more and more centralised tax spending.

Those paying for these initiatives can clearly see they do not work. While those who manage them hold their meetings in spacious, warm, and expensively equipped offices (with high business rates), ordinary taxpayers can still see freezing down-and-outs begging on our streets, poor mums giving laldy to squalling infants in the pound shop, bored teenagers scrawling banter on town walls, and the elderly scunnered for a shilling for the meter in damp flats. These socialist initiatives have failed and they always will.

There are ten-point plans aplenty in the Scottish public sphere; it’s time to resist them, and then scrap them. The Scottish Government needs to show trust of the people to build a new Scotland based on their creativity and technical talent, and a small government.

What Mr Mackay needs to do to start today is look ahead – to offer a ten-year, minimum, vision of a trend to a lower spending, lower taxing state; that can quickly release the “animal spirits” of our wealth creators. Only that can solve the social support crisis we face today. Higher taxation will only make it worse; progressively.



'Government is the great fiction through which everybody endeavours to live at the expense of everybody else.'
Frederic Bastiat