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27 February 2012

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Stephen Boyd

I have disagreed, sometimes profoundly, with CPPR (for instance, I take a very different view of the success of the Water Industry Commission model of economic regulation and it's appropriateness to other public services. I also believe that, when I last sat with him on Newsnight, John McLaren was just wrong to argue that markets are rewarding austerity and that there is a consensus amongst economists that pace of fiscal consolidation in UK is correct) but it is totally unacceptable for opponents to continue to attack them for naked political reasons. I've read much ad hominem criticism of the oil fund report but nowhere have I observed an evidence based detailed rebuttal. Anyone who thinks Stiglitz would support Mr Gibson's arguments over CPPR analysis is living in cloud cuckoo land. There is no contradiction in holding these positions simultaneously 1) yes, it is disgraceful that the UK has failed to invest its oil wealth and, yes, all things being equal the UK/an independent Scotland should seek to establish one as quickly as possible 2) (assuming a yes vote in 2014) contributing £1bn a year to a new oil fund in the early years of Scottish indepedence would be impossible without cutting spending/raising taxes.

Gary

I'm not going to argue against the oil and gas taxation revenue figures cited, but I will ask one pertinent question of you. In an independent Scotland, would the Income tax and NI contributions of employers and employees in Scotland continue to be directed to whitehall, similarly, would the corporation tax VAT and stamp duty etc etc? I'm of the mind that they would not, and if you would agree, then why hasn't any economist, including the authors of the CPPR taken this into account? Any report excluding these figures or even failing to mention them is worthless when you refer to the viability of creating an oil fund.

Brian Ashcroft

Gary,
All the revenue you mention is assigned to Scotland in the Government Expenditures and Revenues Scotland (GERS) report that CPPR uses. This is a Scottish government document.

Gary

Sorry if your misunderstanding my question. Neither GERS nor the CPPR are accounting for any shift in revenue from a London registered company that operates in Scotland. This is almost certainly a factor that should be taken into account before writing off the viability of an oil fund. I should note I'm not an economist but these figures are conspicuous through their absence in any economic report I've read. Surely this should be researched more as a part of the debate on independence?

Brian Ashcroft

Gary, I see what you mean now. However, I am sure that GERS does try and capture such revenue but it may not do so completely accurately. But that said for the two most important taxes it takes for income tax the Scottish share of UK income tax liabilities applied to income tax gross of tax credits, and for corporation tax it takes Scotland’s share of profits (less holding gains) of UK corporations. Now I accept that this may not be wholly accurate and the key issue is what ratio is used for Scotland's share which will vary from UK company to UK company with activities in Scotland and whether this is based on more than a guesstimate. The income tax share in 2009-10 is 7.4% and corporation tax share is 8.7%. The income tax share is a little below and corporation tax share a little above Scotland's population and GDP share excluding north sea oil. I am sure if Scotland had its own tax authority the numbers would be different but not dramatically so as to make much of a difference.

Brian Ashcroft

I have received an email from Jo Armstrong, one of the authors of the CPPR report. In this email she corrects my claim that she was a Special Adviser. She says "I was appointed under Nolan Rules as a Policy Advisor and not a Special Advisor (ie, I was interviewed by ... the then Direct of HR & an external ... to confirm I had the skills relevant to the senior civil service post). The post was for up to 2 years but had to be extended (following approval for civil service in Whitehall) beyond that timeframe and as a consequence, I have a deferred senior civil service pension. I have never ... been a member of any political party."

Alex Gallagher

BTW, Gibson's page on the SNP website states that he has a degree in Economics....

http://www.snp.org/people/kenneth-gibson

So he understand perfectly what he is doing.

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