Tax equals citizenship

Let’s take a random self-made millionaire.  Let’s call him Tony.

Tony began his life with nothing.  His parents worked hard all their lives but never earned more than the minimum wage.  Tony had an older brother who grew up resentful, scorned school, bunked out, tried to make money the ‘easy’ way and is now serving time as a convicted drug-dealer.  Fortunately, Tony was sufficiently younger than his brother that he acted on his mother’s advice, paid attention at school and despite the distractions of his family losing their home as they struggled to keep up with mortgage repayments, Tony kept at it and won a place to university.

Though Tony received a full student grant, the money was not enough to pay for his rent, utilities bills, books, clothes and food, let alone the travel back to see his parents during recess.  Tony kept a part-time job going even as he struggled to fulfill all his study commitments.  He graduated.  Tony didn’t get a first class degree but he did graduate.

Entering the world of work, Tony found that without public school connections and without a wealthy father’s social network, he could not get the plum jobs that would have paid best.  Tony did not give in but worked for experience as much as for a regular salary.  There were challenges along the way: he got ill from stress and had to take some time off work, he was burgled and thanks to being mis-sold insurance and PPI, Tony lost a lot of what he’d worked for.  Tony kept working and as he gained experience, he developed an idea for a business.

In his personal life, there were ups-and-downs.  Tony rarely saw his brother who was now regularly getting lifted by the police.  Tony had been in-and-out of relationships but had recently found a soul-mate in Sharon.  It was Sharon who gave Tony the courage to try something different and together, they began their beverage company, supplying to trade initially before opening their first takeaway venture.  Though the banks offered little help and appeared at times to be charging for doing nothing more than receiving Tony and Sharon’s hard-earned money, the food and beverage company expanded.

One day, Tony is asked by his accountant, ‘Would you like to pay less tax?’

Tony looks at Sharon: they’ve always dreamed of that holiday in Asia, that cottage in the south of France, being able to take things a little easy and haven’t they worked for it?  Yes, they say.  When the accountant shows them how much they can avoid paying, they are at first shocked but then, having taken into account the fees for this service, they look at each other and ask themselves that one big question: ‘Haven’t we paid enough already?’

Tony and Sharon think no more of it.  They are invited to business functions where they can network and help their business opportunities grow.  They are invited to the sort of posh soirees that Tony had missed out on university because he had to work at his part-time job.  They donate money to charity.

One day, they see their names among a list of those deemed ‘morally repugnant’.  Though their tax affairs are supposed to be kept confidential, a government minister is saying that these are the sor tof people to blame for the economic malaise in the country.  Tony is outraged.  He has worked for his wealth and never exploited anyone?  Or has he?

Tony’s education – and his key to escaping the poverty that had blighted the lives of his parents – was paid for largely by the State.  When Tony fell ill, healthcare was always available and always free, provided by the State.  When Tony was burgled, the police did not issue him an invoice and when the burglar was caught, charged, sentenced and imprisoned, the State didn’t charge for that service either.  The Health & Safety regulations that added what sometimes felt like unnecessary cost to Tony and Sharon’s business have actually served to stop untold numbers of customers serving writs against them for food poisoning.  Trade regulations have ensured not only that his suppliers deliver exactly what was ordered but provided a means to ensure that trade customers paid him (reasonably) on time such that he could manage his finances and grow his business.  Other regulations ensured that when Tony’s business needed electricity for the ovens, that energy was there at the flick of a switch.  The roads that carried orders to his business premises and carried business away are funded and maintained by the State.   When, after a long day, Tony returns home to Sharon and they shut the door on their 8-bedroom city centre property, who is it that ensures they can sleep safe at night and not live in fear of someone trying to take from them unlawfully what they have earned fairly?

In paying taxes, we state very clearly that we are a part of a community in which we are actively engaged.  The success of Tony and Sharon’s business may be down to their hard-work but what made that possible if not co-operation with countless others who share their goals?  What made Tony’s dream possible is the countless unseen others who make our streets clean by sweeping them, who keep us healthy by ensuring a running supply of water or who work in hospitals, who toil at sometimes meaningless, repetitive tasks that must be done if any of us, let alone a small elite, are to enjoy the base necessities and comforts that ensure we do not suffer in a Hobbesian nightmare, red in tooth and claw.

When we do not pay a fair level of taxation, when we find ways to avoid paying a reasonable amount of tax proportionate to our level of income, we state that we do not wish to have this security.  Perhaps wealthy tax dodgers should be logged by the police so that when are in need of funds that are not readily available in our society, we might instead knock on these tax dodger’s doors and insist with threats that they give us what we need?

The State is not some Orwellian nightmare peering over your shoulder; it is simply the definition a larger community that reaches beyond the estate, the village, the town or the city where we live.  When we pay our taxes, we declare our participation in a society that will – without written, contractual guarantee – care for us if we should stumble, catch us when we fall but help boost us as we climb.  It will do this for our children too.

Of course, the opposite is equally true: if citizens are paying their taxes, if they are participating in society to the best of their ability then governments had better ensure that they deliver.  If the politics of austerity is a blunt refusal to participate in a social contract by cutting those services that ordinary citizens have paid for, what right does David Cameron have then to criticise those who avoid paying their full share of taxes?

The currency of an independent Scotland

It’s a debate that always gets a little heated: unionists who understand that Scotland would be better off as an independent country are also intelligent enough to know the consequences of not letting Scotland keep Pound Sterling would only pose challenges to Scotland in the short-term*.

In this brilliant article, George Kerevan concisely outlines the four currency options available to Scotland.

In its current form, the euro has but weeks – maybe months – but won’t make it to Christmas, so let’s say that Scotland has three options on future currency given that before joining the euro under existing terms, there’s a two-year ‘proving’ period anyway.

Though it’s called The Bank of England, it is in fact The Bank of the United Kingdom which is to say, the central bank of the UK – independent of control by the government in Westminster – is 9.3% owned by Scottish taxpayers.  This is the reason why the current Scottish government insists it will be able to have a say on the board of The Bank of the England.  If Scotland is told by the Westminster government or by The Bank of England that it cannot use the Pound Sterling, we will be taking that 9.3% with us.  Yes, we will.  Whose oil do you think underwrites the value of ‘your’ central bank?  Still fancy negotiating?  Where do you think you’re going to park your subs?  Portsmouth?

Scotland holds a very strong hand though you would not know it from watching the BBC or reading any newspaper.  Yes, we do.  International law regulates the management of currencies as much as the ownership of natural resources.  Financial markets take care of the rest and as we’ve seen over the past four years… they go with the money.

* By forcing Scotland to either create her own currency, unionists acting out of spite risk capital flight north to Edinburgh where a central Scottish bank could set its own interest rates.  Given that the SNP are already known to want much lower rates of corporation tax (which I suspect is the main area of difference with the Scottish Greens), can you imagine how aggressively a modern Scotland would be drawing business from The City of London?

The very best option for unionists – and  England – is to encourage Scotland to keep Pound Sterling.  But this option is not the best for Scotland – certainly in the long-term.  The Bank of England would set interest rates and as guarantor of that currency, Scotland would not be able to offer lower, more competitive interest rates that would encourage business north to Edinburgh.  The more I watch Tories, Labour and Liberals alike spout nonsense in the Westminster parliament during ‘debates’ on Scotland, the more convinced I am that Jim Sillars may be right: let’s go for short-term pain, set-up our own currency and then watch the land south of our border struggle to make ends meet.

Most people desiring an independent Scotland, want to attain their political and economic independence within a framework that is best for both Scotland and England.  Alex Salmond has stated that his goal is for Scotland to be a friendly neighbour rather than a resentful tenant.  As with a lot of things in language, the clue is not only in the words themselves but in the gaps between – as with everything else, it’s the thought that counts.

Referendum: a definition

According to the Chambers Dictionary (11th edition) on my desk, a referendum is: “…the principle or practice of submitting a question directly to the vote of the entire electorate.”

I like this article in which Revd Stuart Campbell points this out while asking why unionist politicians insist on the SNP administration clarifying it’s policy position on everything from EU membership to the colour for the First Minister’s door at Bute House.

Meanwhile, Scottish voters await clarification on why, despite the Scottish government committing itself to renewable energy, the Coalition in London decided that everyone in the UK – including Scotland – must pay somewhere in the region of £200 extra per year on their electricity bills for new nuclear power stations when (a) the Scottish government has said none shall be built here because (b) with such a huge abundance of natural resources (tide and wind), the people of Scotland don’t need them.

In addition to an existing installed capacity of 1.3 Gigawatts (GW) of hydro-electric schemes (dams), Scotland has an estimated potential of 36.5 GW of wind and 7.5 GW of tidal power or, more simply, 25% of the estimated total capacity for the European Union, never mind the bonus of up to 14 GW of wave power potential or, 10% of EU capacity. (Source: RSPB Scotland, WWF Scotland and FOE Scotland (February 2006) The Power of Scotland: Cutting Carbon with Scotland’s Renewable Energy. RSPB et al.)

In short: why stay in the Union?  Please clarify.

Unionist myth No.2: Scotland can’t afford to go it alone

If you tell a lie big enough and keep repeating it, people will eventually come to believe it…

I was going to call this post ‘Scotland is a wealthy country’ but if you watch the BBC, read The Telegraph or pretty much any mainstream news media then you wouldn’t believe me.  Unless of course you saw this story, How black gold was hijacked: North sea oil and the betrayal of Scotland, first published in The Independent on 9th December 2005.

For Scotland, the torpor which still affects our perception of our own economic worth began long before the reign of Margaret, The Iron Lady.  In the few short years up to 1974, the number of coal mines in Scotland fell by a third and steel production was down by a fifth.

Perhaps, like other people in the UK, I thought that after the launch of an illegal war, I’d grown immune to being surprised by the lengths to which the Labour government in Westminster would go to twist the truth but reading this article reduced me to tears.  Forced by the law to release a report a previous Labour government had tried to bury, there was no reporting that I could find in other newspapers.  When I showed my English work colleagues, they were shocked.  They too saw that this was blatantly a work of deception.

If I can point to a single moment at which I gave up any notions of continuing to support ‘Britain’ and political union, it was this.  I’d never felt ‘British’.  I’d never had a moment where I looked at the Union flag and thought, ‘That’s mine’.  If I’d been asked what I thought I was, it was always ‘Scottish’ or ‘European’ or at a push, for instance, when completing an ethnicity questionnaire on starting a new job, ‘White-Scottish’ (though given my family’s ancestry on my mother’s father’s side of the family, white supremacists would surely never recognise me as such).

I suggest that you read the report.  It’s only nineteen pages long.  Remember as you read that the report was written in 1975.  The North Sea was producing much less oil and gas than it does now.  Also remember that though the stock of oil will not last forever, it will increase in value.  In 1975, oil was trading at a much lower value than it does now.

In 2007, real production revenues for Scotland looked like this:

Figures based on research by Professor Alexander G. Kemp and Linda Stephens, University of Aberdeen, 2008

These figures were published in ‘The Hypothetical Scottish Shares of Revenues and Expenditures from the UK Continental Shelf 2000 – 2013’, first published June 2008 (from which I’ve taken this graph).  The report is available as a PDF download on The Scottish Parliament website from here.  What these figures show is that despite there being up to twice the reserves reported by oil companies, the minimum sums estimated in 2013 will be £15bn.  (The tax revenues that will be derived from these sums will be affected as George Osborne’s budget of 21 March 2012 has had to include measures to offset the damage his budgetary smash-and-grab for cash did to the oil industry in 2011).

Norway has used their oil to fund a pension pot worth £70k per person along with other social investments.  We can only guess at how the wealth generated by Scotland’s oil has been squandered.  Nuclear weapons cost a lot more than the quoted £300m I’ve seen bandied about online.  The provisional estimate is £3bn alone.  How much did the illegal war in Iraq cost?

How then do unionists maintain the myth that Scotland can never afford to go it alone even if we had oil revenue?  Easy.

The UK Treasury splits the British Isles into five states: England, Northern Island, Scotland, Wales and Extra-Regio Territories (aka The North Sea oilfields).  Have a look at the latest GERS (Government Expenditure and Review (Scotland) report for the period 2010-11.  Scotland is a net contributor to UK finances despite the oil revenues being calculated separately (which is to say not included in Scotland’s figures).

For a fuller explanation of how the GERS figures were manipulated by GERS compilers prior to the 2006 report, see this page.

The person behind that quote at the start of this post was Josef Goebbels.  It seemed appropriate at this point to furbish readers with the full quote:

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

Budget Day in Scotland

Will George Osborne help the Scots economy?

It’s Budget Day and while elsewhere in the UK there’s fevered speculation on what will happen – if anything – to the top rate of taxation, here in Scotland, the SNP administration is looking for funding for capital projects.

Let us be clear, the economic strategy of the Coalition at Westminster has left George Osborne with no wiggle room.  This will not be a giveaway budget.  For every concession offered to taxpayers, a service elsewhere will have to be cut.  This is just as true for the devolved administrations.

First Minister Alex Salmond is looking for £300m to fund capital projects in Scotland.  In a letter to Prime Minister David Cameron, the First Minister reminded him that when they met, there was sympathy for capital projects but that the Prime Minister would have to see a list of ‘shovel-ready’ projects .ie. projects that could start within the time-frame of one Budget year.

In his letter, the First Minister argued that: “The clear understanding was that if we could demonstrate that such projects could be taken forward in an appropriate timescale then they would be given proper consideration.

“This we have done and there is now no argument that some £300m of capital projects could be deployed in the coming financial year giving a vital boost to local economies around Scotland.”

The capital projects that the First Minister has in mind are infrastructure projects such as the renovation of the Kincardine Bridge and the Clyde Gateway developments.  Other projects include the development of the Centre for Virology research at Glasgow University.

During a time of austerity, people in Scotland may be wondering why the SNP are focusing on capital projects but in the same letter, the First Minister insists that additional investment would support more than 1,000 jobs.

By making public this request to prioritise investment in infrastructure, the First Minister is challenging the Conservative philosophy prevalent at Westminster of dealing with the public deficit first.

The First Minister has the numbers to make his argument work as Scotland continues to be in a stronger budget position than the UK as a whole according to the Government Expenditure and Revenue Scotland (GERS) 2010-2011 report published on 7th March this year.  These figures show that including a geographical share of UK North Sea oil and gas revenues, Scotland contributed 9.6 per cent of UK public sector revenue and received 9.3 per cent of total UK public sector expenditure, including a per capita share of UK debt interest payments.  Scotland’s population is 8.4 per cent of the UK total.

Quoting Jon Meeten, head of tax at KPMG in Scotland on the BBC News website, there appears to be support for First Minister Alex Salmond’s position: “The CBI has called for some limited, targeted tax breaks for business. We agree that focused assistance for business, especially in the area of capital allowances for infrastructure investment, would be extremely helpful in the current climate.”

Revision

It has been a while since I posted on this blog.  When I considered deleting it entirely, there was a thought that I would be waving goodbye to a part of my life.

This blog was begun as an unofficial response to my work as a bookshop manager at the time.  It wasn’t authorised by my then employer but was read and commented upon by fellow staff in the company and customers alike.

I no longer work in the book trade.  Like many former booksellers, I now work in another industry entirely.  Fewer than 5% of people in the UK read a book regularly let alone buy one.  When compared with the literacy rates of other countries and the interest in literature in countries where an individual’s spending power is severely constrained, it is a shocking indictment of the value placed on education and cultural conversation in this country.

We live in straightened times and yet we do not appear to expect anything but a continuation of what came before.  Perhaps because bookselling has seen such sharp decline since 1999 and that the decline of the British High Street in general has been largely under-reported, the current economic woes appear to be a surprise to everyone else.

Bookselling weathered several storms over the past decade and a bit.  Unlike the publishing and book retail sectors in other European countries, prices were no longer fixed.  The proportion of sale from each book declined as supermarkets – not the internet as you may expect – sold books as loss-leaders, that is, for less than cost price.  Contrary to the opinions of experts, this is not competitive as such price cuts lead to long-term decline in re-investment.  Logically, if you have more money left over after covering your overheads, you can develop new product and staff training.  This ‘money left over’ is not profit until you’ve finished the process of paying for everything and that includes your long-term interests.

Another under-current that impacted negatively upon terms of trade between publishers and booksellers and ultimately consumers, was that the largest publishers in the UK are all public companies.  The primary responsibility for listed companies is shareholder value and market share not profit and not long-term growth.  There is no need to pursue long-term growth if the whole point of owning shares is to sell them for profit in as quick a turnaround as possible.  Second, as market share determines how trade you are ‘taking’ from the whole market and therefore, your competitors, the actual sums devoted to reinvestment can be ignored.  Up is good, a percent decline is not.

Economics cannot be so simply engineered.  It is a fundamental part of society.  If local governments are closing libraries, national government cutting the funding to special groups promoting literacy and the trading conditions are forcing the closure of bookshops, where do the poorest and least enabled gain access to reading content?

The problems that have beset bookselling will eventually feed back into publishing. The main problem that will assail large publishers in the future is mis-management of digital formats.

Charging too much makes the argument to use pirated versions of digital files more compelling.  Charging too little leaves little to reinvest in tomorrow’s talent.  Others still, particularly with those with little appreciation of what is involved in creating new stuff argue that people shouldn’t be charged for the content anyway.  Treid telling that to a taxi driver?  To a barman?  To the plumber or electrician who you called to fix something in your house?

Giving away content online is very noble and trusting and fundamentally, relies on people’s honesty.   Wouldn’t it be lovely if we could just exchange stuff?  I do it now.  I give fruit and vegetables grown in my garden to neighbours.  One of my neighbours gives me mackerel he’s caught while on his boat; another bakes great cakes.  I cut another neighbour’s lawn; I get a lawn of expensive power tools for DIY jobs around the house.  It’s all great but it doesn’t pay the mortgage, the utility bills, the train fare to go see my parents or the nice restaurant meals.

Given the choice between paying for something that you can obtain for free elsewhere, what would you do?  Only large companies like Amazon and Apple can engineer the distribution of content such that authors can get paid.  Everyone else hands out digital files in a format that is easily copied.

There is a reason why things cost money and books are not expensive.  If you’re willing to pay £10 for a cinema ticket that will enable you to enjoy arund 2 hours worth of content, why does more than 10 hours content which you can not only share without threat of prosecution but read again at any time seem so expensive at £7.99?

So here I am, doing something else.  Learning a new trade.  Now that I’m a producer and supplier, I’m on the other side of the fence from where I was at and it’s not easy.  Every day there are reminders that the roots of the economic collapse we are currently enduring worldwide was begun 12 years ago, unleashed by some moron’s decision to allow banks to marge their investment and High Street operations.

One big advantage of being where I am now is that I have more time to think.  I have more time to read, to study and to draw out the arguments and I haven’t been able to do that as much as I like for all of fifteen years.  It feels good.  This blog then will differ quite a bit from this blog.