Wednesday, 17 June 2009

Calman, taxation and representation

In my earlier article on the Calman report, I suggested that the proposal of the report that national rates of income tax as fixed by the UK Parliament should be 10% lower in Scotland than in the remainder of the UK, with the Scottish government and Parliament having the power to make up that missing 10% (and more) with a Scottish income tax to whatever degree it thinks fit, was a sleight of hand with respect to Scottish nationalists.

It is worth mentioning that the same is probably true in relation to those in England or Wales who are concerned by the West Lothian Question, or more generally by constitutional issues concerning the link between taxation and representation.

One of the outcomes of the English civil war was that it finally established that no taxation could be imposed without the authority of Parliament. The King could no longer tax in reliance on the Royal Prerogative, a matter which caused great difficulties to Charles II's administration after the Restoration. This was further entrenched in the Bill of Rights 1689 following the Glorious Revolution, Article 4 of which provides "That levying money for or to the use of the Crown by pretence of prerogative, without grant of Parliament, for longer time, or in other manner than the same is or shall be granted, is illegal".

The need for a link between taxation and representation also formed one of the calls to arms of the revolutionaries in the War of American Independence. The revolutionaries objected to being subject to taxes, and in particular stamp and excise taxes, without representation within the body which fixed them, namely Parliament. In doing so they relied on the Parliamentarian cause in the Civil War that "what an English King has no right to demand, an English subject has a right to refuse" (from the case concerning the extension of Ship Money) and on the rights established by Article 4 of the Bill of Rights. In the period before the outbreak of the Revolutionary War in America, the colonists in objecting to such taxation saw themselves as asserting their rights in defence of the British constitution and the Bill of Rights, rather than acting to subvert that constitution.

The effect of the Calman proposals is that MSPs in the Scottish Parliament must set the rate of income tax for those in Scotland, with the proviso that it is not to be more than 10% below the rate set for the rest of the UK by the UK Parliament (they can set it at any amount above that rate). Since it is pretty well inconceivable that a Scottish government would want to fix a rate of income tax more than 10% below the rate applying elsewhere in the UK, this limitation could be seen as a fig leaf to justify members of the UK Parliament for Scottish constituencies continuing to have a say on the rates of income tax applying outside Scotland. Likewise, the inability of the Scottish Parliament under the proposals to change the differential between higher and lower income tax bands might also be as much to do with keeping some link to the rates of income tax fixed for elsewhere in the UK for West Lothian purposes as with a desire to save the rich in Scotland from unwelcome depredation.

In any event, under the Calman proposals there would be no link to UK rates, for stamp duty land tax, airport passenger tax, aggregates levy and landfill tax applying in Scotland.

Of course, the call of "no taxation without representation" is not necessarily synonymous with "only those representing those paying it are to determine the amount of a tax". What one can say though is that the proposal that the Scottish Parliament should set the rates of income tax, stamp duty land tax, airport passenger tax, aggregates levy and landfill tax applying in Scotland rather than the UK parliament raises constitutional issues for the UK which somewhat belies the Calman Commission's view that it does not need to consider the West Lothian question in making its recommendations, and that it only need concern itself with the position of those in Scotland.

The UK government appears to be taking the line that no referendum in Scotland is required to give effect to the Calman proposals on tax, given that there is already a power for the Scottish Parliament to vary income tax by 3% upwards or downwards so that the principle has already been established. (The original 1998 Act referendum in Scotland covered whether this since unused 3% power should be conferred or not).

However, there is cause to consider whether for constitutional reasons it would be desirable for there to be a referendum within the rest of the UK on the assymetrical taxation autonomy which is now proposed in the report.


Toque said...

In my submission to the Calman Commission I made the point that increased financial accountability for the Scottish parliament means a decrease in financial accountability for Scottish MPs at Westminster.

In my opinion the only justification for Scottish MPs voting on English legislation is the financial implications, namely the knock-on effect on the Scottish budget.

If the Barnett Formula is replaced by something whereby Scotland's budget is determined by some mechanism other than a crude cut of the English budget, then the rationale for Scottish MPs voting on English matters disappears.

It's for this reason, I believe, that the Calman Commission has gone only so far.

It's the best of both worlds. Scottish MPs retain their say on English matters and their say at Westminster on Scotland's block grant. They are financially accountable for what goes on in both Scotland and in England (because they regard England as the 'United Kingdom'). There's the sleight of hand.

Anonymous said...

The Tories are only proposing to reduce the number of "Celtic" MPs are the Westminster Parliament.
For that purpose, all the MPs are now responding to questions on the West Lothian Question, with that single reply.
Interestingly, Ken Clarke's suggestions are not being mentioned at the moment. The reduction of MPs has replaced all other ideas for the moment.
Cameron is more concerned with keeping Scotland in the Union, than with dealing with the unfairness for the English.
On the plus side, a Tory government at Westminster, if handled correctly, will provide a majority for Scottish Independence.
For that reason, letters to MPs and to the Press, should emphasise the difference, in order to play to the Scottish, anti-Englsh mentality. They need a push, because they are not likely to go of their own accord and there are plenty of English activists who are willing to give them a shove from any direction.
I'd say the Calman Commission will help to stir things up and any further powers devolved to Scotland and Wales will also help.
For that purpose, bring on Cameron. He gets my vote.

Withering Vine said...


I think the Conservatives mean what they say and I would be quite surprised if something like Ken Clarke's proposal did not feature in their manifesto.

Also, I don't think they have ever proposed dealing with the West Lothian Question by reducing Scottish representation at Westminster below the average per capita for England (the solution which was adopted for the Stormont Parliament in the Government of Ireland Act 1920): at present per capita representation between Scotland and England is more or less the same. What the Conservatives are proposing is that in the event of a successful Assembly Act referendum in Wales, the current over-representation in Wales should be reduced so that it is the same per capita as in England and Scotland.

I should also make clear that I am not in favour of a break-up of the United Kingdom, and frankly I do not think that Alex Salmond has any chance of succeeding in a referendum in the forseeable future, irrespective of who is in power after the next general election.

My solution to the West Lothian Question is simple - to provide that no Part of a Bill which does not relate to the whole of the UK could pass its Third Reading in the House of Commons unless a majority of the members representing the portion of the UK to which it does apply are in favour, in addition to it having a mojority in the House as a whole, or unless it is passed again in the next Session. In other words, there should be a power of delay analogous to that of the House of Lords. In addition, I think that as devolution deepens there is going to have to be some English dimension to present constitutional arrangements, even if that involves a figurehead to represent the English view on UK issues. This is a view which the Calman Commission appeared to share.

However, as I mentioned I think there is a good case for assymetrical taxation provisions to be approved in a referendum of the whole of the UK, because of the constitutional nature of the link between taxation and representation. But I think different people could take different views on this.

David said...

I agree with Toque's conclusion that getting rid of the Barnett Formula would remove any shred of justification for MPs from the devolved nations continuing to vote on English legislation and expenditure. In addition, Calman's proposals on the Scottish rate of income tax ought really to disqualify Scottish MPs from voting on any legislation, or part of legislation, relating to UK income tax. You could say they're still entitled to vote, as the rate in Scotland will be affected by their decisions, e.g. if the UK parliament votes for a 1p-in-the-pound rise in the basic rate, meaning that the rate would also rise in Scotland in order to keep the same differential. But in practice, it will be only Scottish MPs that will now fix the level of income tax in that country, since - as you say - they would be unlikely ever to get even close to setting a rate 10p lower than in England. So, in virtually all imaginable scenarios, if the UK parliament raised income tax, the Scottish Parliament would have the scope to lower the Scottish rate by the equivalent amount, i.e. vote to keep the old rate and not increase it like the UK Parliament.

This means that, in practice, Scottish MPs would have powers to levy some taxes only outside of Scotland: taxation without representation. Yes, a referendum ought to be required.

Withering Vine said...


I think the argument that the Barnett consequential makes it reasonable for MPs for constituencies outside England to decide matters in England which are devolved in their own constituencies is pretty specious.

This explains why:

Nonetheless, my Third Reading proposal would still give all members a full say on such devolved matters in England, at all stages of a Bill. But it would also allow members for English constituencies to delay laws being forced on their constituents of which they do not approve. That seems to me to be a reasonable compromise.

I realise that this would not impress people who want an English Parliament.

BrianB said...

I am one of those who want an English parliament, but only as a necessary element in the completion of the devolution process -- namely, the move to a full federation of the four nations of the UK, each with its own parliament and executive, with the parliament and government at Westminster becoming federal organs with only limited powers, chiefly in foreign affairs and defence. Devolution has got us half-way into a federal system and we shan't resolve the anomalies discussed here (e.g. taxation, West Lothian) until we complete the process. The current dual role of the Westminster parliament as both a parliament for the whole UK with powers over non-devolved subjects, and simultaneously as a parliament for England with powers over everything (but no English executive to initiate its business and to be held to account by it) is simply untenable and unsustainable: the membership of the house of commons is utterly inconsistent with its latter role, and no amount of fancy foot-work over which MPs can vote for this or that legislation or in this or that debate can solve the problem.

I have argued this case more fully here and in other posts on my blog to which that links.


Anonymous said...

u are so gay

BrianB said...

In my comment above (13 July 2009 20:43) I concluded with a link to a post on my own blog setting out more fully the case for a federation of the four nations of the United Kingdom. Because of changes to my website, that link has become obsolete. It is now:

There are also links in that post to other posts about the case for a federal UK.