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Granny Danger

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So you're saying Scotland would cut welfare and raise taxes? This is and always has been a question of scale. With this current gap we could literally abolish all schools, all defence and cut the NHS by 10% and still only have the same deficit level as a proportion of GDP to finance as the rest of the UK, at which comparable interest rates might even begin to be relevant.

It is simply inconceivable that an independent Scotland would be able to borrow at lower levels of interest rate than the rest of the UK off the back of twice as big a deficit.

 

So, your saying the UK has permanently shafted Scotland to such an extent, that independence can never be made to work, and that only gradual decline under UK stewardship is possible?

 

Quite frankly, I think GERS is bollocks, it doesn't really tell you how well Scotland's economy is doing, it only tells you how much public spending is made relative to the UK, and even then it's largely guesswork. There is absolutely no figures on the levels of private capital investment, or exports from Scotland, no clue as to the wider picture of how Scotland's balance of trade is working, therefore we can say with no confidence what interest rates would be. I don't doubt that different spending decisions would be made by an independent Scotland, whether on tax and spend, or on defence, or on welfare. We don't know what the debt situation would be in an independent Scotland (we always assume a per head share, but that could change dependent on certain conditions like the basing rights for Trident).

 

Crucially, there is no evidence that Westminster is willing to tailor it's public spending requirements, or give scotland the full powers to do so itself, to close what you believe is a catastrophic black hole in our nation's finances, which surely will make things worse over time.

Edited by renton

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https://thecommongreen.wordpress.com/2016/03/09/we-need-to-talk-about-gers-2014-15-edition/

 


Now, it can also be seen that the UK’s receipts are rising too, by around 3-4% (as it has done for the past few years) but there is a critical couple of numbers missing from the these raw data which hasn’t been accounted for. First, inflation in recent years has run at around 1-2% and the UK’s population is rising at approximately 1% per year (largely due to inward net migration) whereas Scotland’s population is and has long been largely static (and, of course, the Scottish Government has almost no control over immigration).

 

These figures erode the UK’s real terms revenue per capita growth rate to very nearly zero. George Osborne’s “fastest growing economy†is clearly not being felt in the pockets of the average Briton (It also, as a side note, shows the positive, or at least neutral, effect of immigration to the UK. Those folks coming in are clearly paying their way and are not being a “burden†on the taxpayer).

 

With these factors laid out, and bearing in mind that some of the feedbacks can take some time to work through the system, we can consider Scotland’s overall change in GDP (I know it’s not the best single figure with which to measure an economy but it’s the one everyone uses) which, if the critical voices are correct should have taken an absolute catastrophic dive in the wake of the collapse of oil. What has actually happened, as laid out on page 35 of the GERS figures, is that North Sea GDP has dropped by £5.67bn from £18.2bn to £12.5bn but that the onshore economy has risen by £5.54bn from Â£135bn to £141bn. The Scottish economy has shrunk but by only 0.09% or £132 million. Not bad for an economy supposedly “reliant on oilâ€."

 

"As noted in my article last year, income tax, corporation tax and capital gains tax remain significantly below the UK average despite Scotland having a higher employment rate than rUK. This shortfall reflects a lower average wage and lower rates of the very rich living in Scotland (For some reason they tend to prefer living in overpriced cramped bedsits in London than buying mansions and castles in Scotland, at least for their “first†home…) and amounts to approximately £2.3 billion potentially lost to the Scottish coffers. This is a substantial increase over last years figures of a £1.7billion shortfall and reflects the increasing concentration of the UK economy inside London and the South-East. And we have to remember that Scotland is one of the better performing extra-London “regionsâ€. It’s becoming increasingly clear that the Tory economic model for the UK is to let the bankers move the money around whereas everyone else must leave them alone and try to not cost too much before we shuffle off this mortal coil.

gersregion.png?w=676

Now, if Scotland had full control over its income tax rate it could adjust banding, *including the zero-rate Personal Allowance*, to set rates more commensurate to the Scottish demographics and economy. We might even consider raising the minimum wage to the Living Wage to increase both the amount of income tax paid and the amount money people would have to spend in the local economy which, as we’ve seen, is the primary driver of overall economic wellbeing. But, as we know, we’re not getting nearly that level of control. We’ll be able, eventually, to adjust non-PA bands but the PA is the one that almost everyone falls into. Changes to that will severely curtail the Scottish Governments ability to use its income tax powers and, of course, we’re not getting any power over Corporation Tax, Capital Gains, National Insurance or VAT (the accounting adjustment being fobbed off as a “devolution†of VAT in the Scotland Bill 2015 doesn’t count outside the most ignorant of political rhetoric). With notional control over only about 30% of Scottish income (and, as said, with severe caveats on much of that) Scotland’s economic fortunes will still be strongly tied to the whims of Westminster. Another thing to remember if trying to extrapolate to the fortunes of an independent Scotland.

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So, your saying the UK has permanently shafted Scotland to such an extent, that independence can never be made to work, and that only gradual decline under UK stewardship is possible?

Nope, I'm saying that Scotland is less good at growing its tax base than the rest of the UK is.

Quite frankly, I think GERS is bollocks, it doesn't really tell you how well Scotland's economy is doing, it only tells you how much public spending is made relative to the UK, and even then it's largely guesswork.

No, it also gives the single best indication we have of the amount of revenue we are raising from that economy. And it's not "largely guesswork" - it contains estimates, for sure, but that's not "guesswork". They are informed approximations, and the extent to which they are inaccurate is within a tiny range compared to the massive amount by which Scotland is contributing less and receiving more.

There is absolutely no figures on the levels of private capital investment, or exports from Scotland, no clue as to the wider picture of how Scotland's balance of trade is working, therefore we can say with no confidence what interest rates would be.

Except we can, because unless the balance of trade was so wildly at variance with the balances of trade we see between other countries, the fundamentals of "the bigger your deficit, the more it costs to service" still apply.

I don't doubt that different spending decisions would be made by an independent Scotland, whether on tax and spend, or on defence, or on welfare. We don't know what the debt situation would be in an independent Scotland (we always assume a per head share, but that could change dependent on certain conditions like the basing rights for Trident).

This is laughable. An independent Scotland would take on approximately a per capita share of debt and the location of Trident would have a bearing on that accounting for less than a fraction of a percentage of that debt figure if at all.

Crucially, there is no evidence that Westminster is willing to tailor it's public spending requirements, or give scotland the full powers to do so itself, to close what you believe is a catastrophic black hole in our nation's finances, which surely will make things worse over time.

Except of course they were. This is what the Treasury proposed to do, very slowly, as part of the full devolution of income tax. By deducting from Barnett on the basis of indexation rather than indexation per capita, they were going to erod the Barnett advantage that creates this fiscal imbalance, eventually bringing Scottish spending as a proportion of UK spending into line with both Scotland's contribution towards tax revenue raised and our population share: i.e. closer to 8% rather than above 9%.

But the SNP said this was unfair and threatened to wreck the Scotland Act over it.

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So basically, UK tax and spend decisions,as well as it's wider South east-centric immigration policies do not gear well with Scottish demographics. Union dividend, right there.

 

GERS is a partial account that does not show how the broader economy is performing, were we to look at the level of UK deficit from public spending vs that of, say Germany,  with no further information on how the UK's balance of trade effects how much interest we pay on that, we might conclude that the UK simply cannot afford it's own sovereignty.

 

Beyond that though, there are very real concerns that the Scottish economy cannot change it's overall performance while tied to current UK fiscal and financial policies. Moving to a much more equal distribution of wages, alongside a progressive tax base would raise many more billions in income tax and NI every year. Moving to a LVT system and away from CT would also raise several more billions per year as well. Put alongside a reduction in those things, such as reductions in our ridiculous defence overspend relative to the forces based in Scotland - and we could eliminate or at least massively reduce our deficit to manageable levels, if it is not already manageable.

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Point of order. No one said it was "unfair" it was contrary to the no detriment principle agreed in Smith.

If the unionists want to make promises in haste and repent at leisure then hell mend them.

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1. Nope, I'm saying that Scotland is less good at growing its tax base than the rest of the UK is.

2. No, it also gives the single best indication we have of the amount of revenue we are raising from that economy. And it's not "largely guesswork" - it contains estimates, for sure, but that's not "guesswork". They are informed approximations, and the extent to which they are inaccurate is within a tiny range compared to the massive amount by which Scotland is contributing less and receiving more.

3.Except we can, because unless the balance of trade was so wildly at variance with the balances of trade we see between other countries, the fundamentals of "the bigger your deficit, the more it costs to service" still apply.

4.This is laughable. An independent Scotland would take on approximately a per capita share of debt and the location of Trident would have a bearing on that accounting for less than a fraction of a percentage of that debt figure if at all.

Except of course they were. This is what the Treasury proposed to do, very slowly, as part of the full devolution of income tax. By deducting from Barnett on the basis of indexation rather than indexation per capita, they were going to erod the Barnett advantage that creates this fiscal imbalance, eventually bringing Scottish spending as a proportion of UK spending into line with both Scotland's contribution towards tax revenue raised and our population share: i.e. closer to 8% rather than above 9%.

But the SNP said this was unfair and threatened to wreck the Scotland Act over it.

 

1. This is largely a product of demographics. Without much more radical devolution of tax powers, the minimum wage and immigration it seems unlikely we'll be able to optimise our tax regime to raise more money.

 

2. I disagree, there are many revenue streams which it is more or less impossible to deconvolve by locality, so different methodologies are employed to take a stab at it: best does not mean good enough.

 

3. It really would depend on how strong Scotland is as an exporter, and how much general economic activity doesn't end up on our balance sheets at this point, in terms of primary sector produce (for example, Whisky) as well as strong performances in financial, engineering and manufacturing. We may have a bigger relative deficit but how much it costs to service that will be relative to the broader economic performance.

 

4. Prove it.

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So basically, UK tax and spend decisions,as well as it's wider South east-centric immigration policies do not gear well with Scottish demographics. Union dividend, right there.

 

GERS is a partial account that does not show how the broader economy is performing, were we to look at the level of UK deficit from public spending vs that of, say Germany,  with no further information on how the UK's balance of trade effects how much interest we pay on that, we might conclude that the UK simply cannot afford it's own sovereignty.

 

Beyond that though, there are very real concerns that the Scottish economy cannot change it's overall performance while tied to current UK fiscal and financial policies. Moving to a much more equal distribution of wages, alongside a progressive tax base would raise many more billions in income tax and NI every year. Moving to a LVT system and away from CT would also raise several more billions per year as well. Put alongside a reduction in those things, such as reductions in our ridiculous defence overspend relative to the forces based in Scotland - and we could eliminate or at least massively reduce our deficit to manageable levels, if it is not already manageable.

 

They key question is the currency union and whether an independent Scotland would be bound by a fiscal treaty with rUK. The alternative is to join the Euro (with monetary policy decided in Frankfurt) or establish a Scottish currency. Only the latter would give Scotland fiscal independence.

 

Are you sure that such tax policies would raise billions more revenue? Each billion would require an average increase of several hundred pounds per working adult. The big earners and employers could move away to lower tax countries. 

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They wouldn't be able to do it if we were independent. Should the Northern Irish be allowed to participate in the Sunday trading laws of the Republic? What about Spain Portugal's?

No politicians that are not part of a country where laws are being made should not be allowed to vote in that Parliament. Neither should you or I. But of course we are talking about people who ARE members of the respective Parliament.

If we were independent I would quite happily accept that we would not have politicians who could participate in this vote.

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They key question is the currency union and whether an independent Scotland would be bound by a fiscal treaty with rUK. The alternative is to join the Euro (with monetary policy decided in Frankfurt) or establish a Scottish currency. Only the latter would give Scotland fiscal independence.

 

Are you sure that such tax policies would raise billions more revenue? Each billion would require an average increase of several hundred pounds per working adult. The big earners and employers could move away to lower tax countries. 

 

The scandanavian countries actually have a more regressive tax system than us, but because their wage structures are much more equal (better pre-distribution as Ed Milliband would call it) they raise far more in taxes and therefore afford much higher levels of spending. Big earners and employers might take flight - that's always a risk, but other factors could keep them here: closing loop holes to make it harder to move wealth, taxing on the basis of land value would make it harder to move that asset, for employers it's a case of inertia (why move if the costs of that move are more than sticking around) as well as having access to a skilled workforce.

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...This seems to have passed many people by, as they think Scotland should accept minority status within the UK; be bound by the political decisions of England's MPs on the majority of issues; have no statehood; and simply accept all of this out of sheer, misty-eyed affection for London rule (because it's been our capital for 300 years and Gordon Broon was born in Scotland don't you know!)

 

Wrong!

I can remember a few years ago when Gordon Brown was in America it was reported that an American interviewer asked him where he was born.

North Britain was the reply.

I googled that and found this blog.

Some of the comments are no bad.

 

http://munguinsrepublic.blogspot.co.uk/2009/12/great-gordon-brown-great-britishness.html

Way back in 2007 when the Labour party, without a vote, wished Gordon Brown upon us because it was his turn, his first address to parliament laid out his Britishness.

It was a word he was to use over and over, ad infinitum, ad nauseum.

Every speech had British and Britishness in it more times than it had words like “and†and “theâ€.

He even told an American interviewer that he came from “North Britain†in an obvious attempt to be acceptable to the English, and without thinking just how incredibly insulting it was to Scots.

 

Maybe Ad Lib should dae a Broonie and say he was born in N.B.

It might get him a political gig down south.

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So basically, UK tax and spend decisions,as well as it's wider South east-centric immigration policies do not gear well with Scottish demographics. Union dividend, right there.

 

GERS is a partial account that does not show how the broader economy is performing, were we to look at the level of UK deficit from public spending vs that of, say Germany,  with no further information on how the UK's balance of trade effects how much interest we pay on that, we might conclude that the UK simply cannot afford it's own sovereignty.

 

Beyond that though, there are very real concerns that the Scottish economy cannot change it's overall performance while tied to current UK fiscal and financial policies. Moving to a much more equal distribution of wages, alongside a progressive tax base would raise many more billions in income tax and NI every year. Moving to a LVT system and away from CT would also raise several more billions per year as well. Put alongside a reduction in those things, such as reductions in our ridiculous defence overspend relative to the forces based in Scotland - and we could eliminate or at least massively reduce our deficit to manageable levels, if it is not already manageable.

1. Scotland doesn't need independence to implement policies that deliver more equal wages

2. Scotland doesn't need independence to make its tax-base more progressive, though the evidence suggests this would raise less than 1/20th of its gap relative to the UK if we are talking principally the top rate of income tax.

3. Scotland doesn't need independence to deal with demographic issues. I strongly suspect there will be movement on the Post Study Work Visa, for example, after the EU referendum is done and dusted, to reintroduce something similar to the Fresh Talent initiative. There is room to create a supplementary work visa programme to attract people specifically to Scotland. Maybe try arguing for that before saying absolutely nothing can be done without independence.

4. The UK can't afford its own sovereignty. That's why we should be in the EU.

5. Our defence spend isn't even remotely close to closing our fiscal gap with the UK. It's less than 1/3 of it. We are talking abolition of the military, all the direct and indirect job losses from that, for no benefit

6. Scotland doesn't need independence to replace council tax with land value tax. The SNP government could have done this almost a decade ago!

Basically, the argument isn't about whether changes need to be made to the Scottish economy. The question is are those changes more viable and less costly inside or outside of the Union. The GERS figures point strongly to the reality that independence would be much more difficult than the present fiscal settlement, from which Scotland does extremely well.

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Maybe Ad Lib should dae a Broonie and say he was born in N.B.

It might get him a political gig down south.

Gordon Brown and I both have a lot in common. We were born in Glasgow but grew up in the Lang Toun. Also sons of the manse...

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The scandanavian countries actually have a more regressive tax system than us, but because their wage structures are much more equal (better pre-distribution as Ed Milliband would call it) they raise far more in taxes and therefore afford much higher levels of spending. Big earners and employers might take flight - that's always a risk, but other factors could keep them here: closing loop holes to make it harder to move wealth, taxing on the basis of land value would make it harder to move that asset, for employers it's a case of inertia (why move if the costs of that move are more than sticking around) as well as having access to a skilled workforce.

 

Call centres are just one example. Scotland could lose jobs to India or other parts of the UK. If you make it harder to move wealth, in or out of the country, investors will look elsewhere. The recent experience of Ireland suggests that lowering key taxes brings in more revenue. Scotland, by lowering taxes, could attract more inward investment from rUK and other countries.

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GERS is a device used to fight against Scottish independence. The last two serious studies on it done by actual economists as opposed to posters on a football forum found it understates the health of Scotlands finances by as much as £17 billion per annum. The £8 billion 'black hole' it seems is really actually an £11 billion subsidy from Scotland to the UK each year. And of course there is no GERW or GERNI or for any area of England, just Scotland. It also doesn't take into account things like the massively disproportionate subsidy Scotland pays for infrastructure projects deemed of 'national' interest by the UK government and Scottish exports and economic activity counted as English due to port of departure or location of head office (London).

I also read someone say here its the Scottish governments own figures/methodology, it's not, the estimates (most of GERS is estimates) are done by the UK government.

Hello btw, first post.

Edited by Peppino Impastato

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GERS is a device used to fight against Scottish independence. The last two serious studies on it done by actual economists as opposed to posters on a football forum found it understates the health of Scotlands finances by as much as £17 billion per annum. The £8 billion 'black hole' it seems is really actually an £11 billion subsidy from Scotland to the UK each year. And of course there is no GERW or GERNI or for any area of England, just Scotland. It also doesn't take into account things like the massively disproportionate subsidy Scotland pays for infrastructure projects deemed of 'national' interest by the UK government and Scottish exports and economic activity counted as English due to port of departure or location of head office (London).

I also read someone say here its the Scottish governments own figures/methodology, it's not, the estimates (most of GERS is estimates) are done by the UK government.

Hello btw, first post.

 

Hi and welcome tae the club :thumsup2

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Gordon Brown and I both have a lot in common. We were born in Glasgow but grew up in the Lang Toun. Also sons of the manse...

Methinks you are leaving yourself wide open there :lol:

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Hi and welcome tae the club :thumsup2

Hello and thanks. I think this is very important, the next referendum will be fought largely on these figures, it's important people know the extent of fiddling that goes on to distort these figures to hurt the independence campaign.

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GERS is a device used to fight against Scottish independence. The last two serious studies on it done by actual economists as opposed to posters on a football forum found it understates the health of Scotlands finances by as much as £17 billion per annum.

1. No they didn't.

2. There have been major revisions to GERS methodology since the last major study into its operation.

 

 

1. The £8 billion 'black hole' it seems is really actually an £11 billion subsidy from Scotland to the UK each year.

2. And of course there is no GERW or GERNI or for any area of England, just Scotland.

1. No it isn't. GERS does not understate Scottish tax revenue by over one third.

2. This is irrelevant. It doesn't matter whether the money that comes to us comes from someone living in Cardiff or someone living in Bangor or someone in Leicester.

 

It also doesn't take into account things like the massively disproportionate subsidy Scotland pays for infrastructure projects deemed of 'national' interest by the UK government

Yes it does. Infrastructure projects are apportioned by GERS to account for the extent to which a project entails spending in Scotland.

 

and Scottish exports and economic activity counted as English due to port of departure or location of head office (London).

Something that we couldn't fix with independence because of the global nature of taxation. This has already been looked at in revisions to methodology used for various purposes between HMRC and GERS figures and even allowing for these anomalies it changes the outlook of the Scottish revenues by less than 5% even on the most omptimistic of projections. And GERS accounts for it.

I also read someone say here its the Scottish governments own figures/methodology, it's not, the estimates (most of GERS is estimates) are done by the UK government.

It is the Scottish Government's own figures. GERS is a body that exists under the supervision of the Scottish Parliament and is accountable to the Scottish Government. Its remit is set by the Scottish Parliament and the SNP relied on their figures during the independence referendum. It is true that a lot of their data relies on HMRC and Treasury statistics, but there are a number of areas where the GERS figures depart from those where they believe the methodology used by those UK government departments, usually by reason of serving a different functional purpose, give an unfair reflection of the reality. This is why GERS gives slightly higher figures for Scottish corporation tax and VAT receipts than HMRC does but also why HMRC churns out higher income tax receipts than GERS does.

And hello!

Edited by Ad Lib

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I can't reply to this on a tablet can't even quote it. You tell several blatant lies though and I would encourage anyone to look into it themselves you will come to the same conclusion.

Example of a lie you told global taxation, corporation tax is paid according to where business is conducted, companies would have to pay according to the amount of business they do in Scotland, instead of the UK government counting economic activity as part of English GDP even when it takes place in Scotland because their head office is in London, same with Scottish exports being counted as English if they leave English ports.

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I can't reply to this on a tablet can't even quote it. You tell several blatant lies though and I would encourage anyone to look into it themselves you will come to the same conclusion. Example of a lie you told global taxation, corporation tax is paid according to where business is conducted, companies would have to pay according to the amount of business they do in Scotland, instead of the UK government counting economic activity as part of English GDP even when it takes place in Scotland because their head office is in London, same with Scottish exports being counted as English if they leave English ports.

Wrong. Corporation tax is levied where profits are legally declared. See the use of the double-Irish-Dutch-sandwich used by lots of multinationals and financial services organisations to minimise their tax liability.

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