Jim and Margaret Cuthbert: Income tax is not the whole story

In HIS article in The Scotsman of 11 January, Iain McLean fundamentally misrepresents our argument on Calman. It is not centred on the simple Laffer curve as illustrated in Mr McLean's diagram.

The Laffer curve is concerned with the relationship between tax rate and tax revenues when everything else is held constant. Our argument is concerned with the much more realistic case where a Scottish government, interested in stimulating the economy, deploys an income tax cut as just one part of a package of measures. We see it as perfectly feasible that an overall package could stimulate the Scottish economy and increase total income tax revenues in Scotland.

The problem we have pointed out is that the Calman proposals would lead to the Scottish Government receiving a decreased share of the total tax take – so that it would actually be likely to be worse off in absolute terms under this scenario.

The nub question we ask Iain McLean is – does he think an income tax cut, as part of a package of stimulatory measures introduced by a Scottish government, could grow the economy and increase total tax revenues?

If his answer is no, then why is he proposing the introduction of tax arrangements which mean that the only course open to a cash-strapped government is to increase the income tax rate – so deflating the Scottish economy?

Scotsman readers should be aware that one of the advisers appointed by the Scottish Parliament committee on the Scotland Bill is no less than the former secretary to the Calman Commission, and the other adviser was a member of the expert group advising the Calman Commission.

Without any reflection on the individuals concerned, we find these appointments quite inconsistent with the committee being seen to perform an independent scrutiny role.

This is why, when we learned of the advisory appointments, we withdrew our initial acceptance of the committee's invitation for us to give evidence.