News: January 2011 Archives

The Scotland Bill, which has its second reading today, contains a powerful increase in freedom for Scotland to introduce entirely new taxes.

Although much of the debate has centred on the "Scottish [income tax] rate resolution", merely devolving greater control over personal tax rates, two potentially far more significant clauses appear just below this. These allow for an Order in Council (secondary legislation, not requiring debate at Westminster) to "specify, as an additional devolved tax, a tax of any description" (our emphasis) and associated "modifications of any enactment, or any other instrument"; and for the "disapplication" (i.e. abolition, in Scotland) of Stamp Duty Land Tax (SDLT).

SDLT is a tax on transactions, not on land values. Although the Bill also enables a Scottish "tax on interests involving land" (i.e. a Scottish SDLT), there is no requirement placed upon Scotland to levy such a tax. Therefore in Scotland, if the Scottish Government wishes to introduce a tax based on the annual rental value of land (Land Value Tax or LVT), unless this Bill is amended it would not require approval of Parliament in London in order to do so.

Scotland's own Parliament faces an election in May. The current minority Scottish Nationalist Government has already shown initiative in piloting Tax Increment Financing (TIF) - perhaps just because it can, i.e. to flex its financial muscles. All but 18 of the 129 MSPs belong to parties with either explicit support for LVT or a strong and growing level of support for it in Scotland. The Greens and Lib Dems are committed, as are several SNP and Labour/Co-op Party MSPs in Scotland.

Although the Scotland Bill may not recieve Royal Assent before the May elections, it provides every reason for supporters of LVT to campaign hard for these newly devolved powers to be exercised thereafter. Unlike the rest of Britain, Scotland has a complete Register of land ownership and does not depend on Whitehall-based officials to conduct land valuations. Given the will of those assuming power in May, LVT could be contributing to Scottish coffers and a resurgent Scottish economy well before the next UK General Election in 2015.

Land reform was one of the first areas for policy action by the devolved Scottish Assembly (as it then was called) in 1998, which helped re-educate Scottish people as to the benefits of LVT, even though it was outwith their legislators' powers until now. Lawyers and valuers based in Scotland among PLRG members should get busy!

This week the Treasury Select Committee of the House of Commons began hearing evidence on the Fundamentals of Tax Policy. Members of the Mirrlees Review team of the Institute of Fiscal Studies, which recommended LVT in a report late last year, were among the first to be heard by MPs.

At least eight of the member organisations belonging to the Coalition for Economic Justice, of which PLRG is a member, have submitted written evidence to the House of Commons Treasury Committee, which launched an Inquiry into tax in November, prompted by Mirrlees. PLRG itself did not submit evidence, since it has yet to become involved in original research on the matter. However many of our members will be interested to read the submissions. The closing date was Friday 14th January 2011.

Under House of Commons Rules on such Inquiries, the evidence (as submitted) cannot be published other than by Parliament itself, unless special permission is given. However drafts of some of the Memoranda submitted by CEJ members have been circulated and/or placed on their websites.

One organisation - the Lib Dems' ALTER (Action on Land-value Taxation & Economic Reform) has already received permission to let its individual members see their submission (here in draft), which was prepared by economics lecturer Brian Hodgkinson (author of The New Model of the Economy). Extracts of all eight submissions are soon to be made available on each organisation's websites. In addition to ALTER, these are: Labour Land Campaign; Land Value Taxation Campaign; Henry George Foundation; School of Economic Science; Transforming Communities; Systemic Fiscal Reform Group; and CEJ itself.

Most of the authors of the CEJ's submissions hope to be called to give oral evidence to the Committee in coming weeks.