Friday, September 05, 2008

Brown Backs Fiscal Autonomy

It was a bold not tim'rous beastie that faced the Scottish CBI yesterday in Glasgow. The Prime Minister referring to the Calman Commission said:

"The Scottish Parliament is wholly accountable for the budget it spends,
but not for the size of its budget.

"And that budget is not linked to the success of the Scottish economy
and that's why we've asked Calman to look carefully at the financial
accountability of the parliament."

Well that to me looks like a shift in Labour opinion towards fiscal autonomy for Scotland within the UK and I can fully understand why the Nats would want to attack him for saying it. If Labour and then the Tories then join with the Liberal Democrats who already want fiscal Autonomy for the Scottish Parliament then one major tranche of the push for independence could be nullified.

It is possible to be fiscally autonomous within another larger national state Germany and the USA are just two different yet successful examples of how this works. In both the individual states have far greater freedom over their tax raising powers than the limited powers invested in the Scotland Act to merely vary income tax from the UK norm by plus or minus 3p in the pound.

As any of us who visit the USA on holiday or business know the taxes you pay on hiring a car can depend on which state you hire it in. Also the level of purchase or green tax may vary once you cross a state line. It doesn't hinder the effectiveness or willingness of people to live in one state over another, which is why one of the arguments being put about predominantly by Labour against LIT that a different tax will stop people living here is a nonsense. You only have to look at the UK's only land border, with Ireland, and see that people happily shift either side of it in both directions most of the time merely for the location of property and not necessarily for tax benefits on one side or the other. The same will hold true for the line in the hills from Gretna to Berwick.

One thing fiscal autonomy will require is more scrutiny of the budget here in Scotland. During the recent Lib Dem leadership election one of the candidates did say that the party should have taken a stronger line on some of the spending proposals put forward in the budget. If we do have more say in just how big that budget is by raising that revenue, as well as the already existing power we have in spending it then just like in Westminster the budget debate will be a heavily scrutinised process by all parties.

So if Gordon is prepared to loosen the Treasury purse strings to make the Scottish Parliament accountable for the size of its budget as well there may be life in the Labour Party yet. Judging by the Nat's reaction accusing him of "caving into pressure". Maybe as Tavish Scott said the Calman Commission if not watered down by Gordon may be radical enough to bring about one of Galdstone's goals of home rule for Scotland.

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