Why shouldn't an independent Scotland be right wing?

Why shouldn't an independent Scotland be right wing?

by Alex Massie
article from Tuesday 12, February, 2013

A QUESTION for those readers who oppose Scottish independence: who would you wish to prevail in the first elections held in an independent Scotland?

Granted, you might prefer never to vote in such circumstances but, assuming the matter came to this head, who would you rather see form the first government of an independent Caledonia? The choice seems likely to be between the SNP and the Scottish Labour Party.

Hobson's choice, you may say. But I think you would be wrong. There are two arguments about independence. First, is it necessary and second what sort of Scotland might emerge if the referendum produces an answer that leads to independence? An independent Scotland is certainly feasible. Is it required and if so what is it required to do? Good people may surely disagree in good faith upon these matters.

What seems clear, however, is that the SNP prospectus for independence must disappoint many of those presently minded to endorse the great separatist cause while, perhaps paradoxically, offering some succour to at least some of those who might be thought least likely to rally their colours to the nationalist flag. This is Scotland and we do irony here.

For a long time now some of us have been pointing out that an independent Scotland would most probably have little room for manoeuvre in the realm of fiscal policy. That is, borrowing and taxation rates would have to be set with half an eye on whatever was happening in the rest of the (rump) United Kingdom. More particularly, it is very difficult to see how Scotland could levy taxation at rates significantly higher than those applying in England. Nor could the qualifying threshold for higher levels of income tax be significantly higher in Scotland than in England. Why not? Because Scotland will need its best, its brightest and, yes, its wealthiest too.

So it was gratifying to see John Swinney admit this last week. Mr Swinney is sometimes referred to as a "safe pair of hands". This is mildly patronising. He is rather more than that. The Finance Secretary is not a head-banging, delusional, dreamer. Or, as he put it last week, “I don’t envisage ­increases in personal taxation in an independent Scotland.”

It is sometimes forgotten that Alex Salmond is one of the few British politicians who still believes in the Laffer Curve. That, you will not need to be reminded, is the belief that there exists a level of taxation above which increasing taxes actually lowers revenue. It is not true, as some Conservatives believe, that all tax cuts pay for themselves but, equally, the Laffer Curve does exist and there is a point, dependent upon circumstances, at which tax increases cease producing additional revenue. The argument should not be about the Laffer Curve's existence but, rather, where we find its tipping point.

Mr Swinney appears to recognise this. So does his boss. The SNP's economic and fiscal leadership is more neo-liberal than many independence supporters may care to think. Of course, the SNP is not led by socialists. This should cheer non-socialist Unionists. And it should remind these Unionists that the battle for Scotland is not only a matter of the Union versus independence but of socialism versus a more prosperous, non-socialist alternative.

Or, to put it another way, is a neo-liberal independent Scotland preferable to - and liable to be better-governed - than a Scotland that remains within the Union but is ruled by a Labour party in London led by a politician as lacking in imagination or nous as, well, say, Ed Miliband?

This is a question rarely asked. Can Scotland afford the return of a government in thrall to old-fashioned tax-and-spend politics? Not necessarily. This is not a brand of politics that has served Scotland surpassingly well in recent decades.

Independence might concentrate minds. As Crawford Beveridge's Fiscal Commission reported this week, “An independent Scotland will need to establish its credibility on international financial markets to minimise its borrowing costs. This could be achieved by adopting a strategy for reducing public sector debt, and an effective budget constraint for the public finances.” Well, yes.

Mr Beveridge's suggestions, commissioned by the Scottish Government, add weight to the notion that Scotland's future lies as a low-tax, flexible, nimble, enterprise. It is not the Nordic future envisioned by some in which the state spends more than 50% of national income.

Of course perhaps Mr Beveridge, Mr Swinney and Mr Salmond are mistaken. They may be! Nevertheless it seems quite probable that cutting public spending - for one reason or another - will be one of the first tasks facing an independent Scotland.

The SNP desires a "competitive" rate of corporation tax. Since George Osborne plans to cut corporation tax to 21% by the end of this parliament one wonders how much room for manoeuvre any SNP government in an independent Scotland would really enjoy. Nevertheless, Mr Swinney's stated ambition remains laudable.

Increased growth is, of course, a good thing but no politician can guarantee that. If only it were so simple. True too, the spending commitments made by nationalist ministers often seem based on a number of heroic assumptions.

The SNP are caught between promising the earth and reassuring voters that relatively little will change. Especially on tax. I fancy it is those who believe the earth comes cheap who will be disappointed by independence while those who presently suspect independence must be a disaster might be pleasantly surprised by the degree to which it proves to be something less than a disaster.

That assumes, of course, that the SNP remain in power after independence. Perhaps they would not and Labour will become the dominant force once again. That is a sobering thought. That is for the future. The more immediate point is that Scotland just might - these things can never be guaranteed - be a more right-wing country, fiscally-speaking, than it presently is. Which leads, of course to this question: other than for reasons of sentiment (which reasons should not be dismissed) and assuming that Mr Swinney is speaking the truth, why should right-of-centre Scots be so afraid of independence?

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