AN economic justice campaigner has said Scotland must have a clearer and more effective tax system than the UK does if it is to adopt its own currency post-independence.
On the latest IndyLive podcast, Professor Richard Murphy, who campaigns on tax avoidance and evasion, said while he is in “no question” an independent Scotland would need to have its own currency, it must adopt a different political approach to tax than the current “light touch” of the UK Government.
He insisted having a strong tax system would ensure the country could deliver real social justice and reduce inequality.
“While there is no question in my mind that an independent Scotland has to have its own currency, and has to have that as quickly as possible after independence, we also have to address in that critical period between announcing independence and getting to independence day how the Scottish tax system will work,” said Murphy.
“We can use tax for the social advantage of a country that really wants to deliver social justice.
“I genuinely believe that is one of the major reasons the people Scotland want to be independent is to get rid of the ghastly neo-liberal mess they have had to live under for so long and if that’s the case then my argument is we need a strong, effective tax system in an independent Scotland, not just to support the value of the currency - because it will do that - but also to deliver those social and economic policies that will build the foundations for genuine prosperity across Scotland in the future.”
Murphy – who has been a major critic of the Government Expenditure and Revenue Scotland (GERS) figures over the years – claimed Westminster has underfunded HM Revenue and Customs since it came into existence from a merger between Inland Revenue and HM Customs and Excise in 2005.
The department now has just over 60,000 staff compared to 100,000 17 years ago when it was formed, he said.
He highlighted how he last month received a reply to a letter he sent to HMRC more than three years ago, citing it as a sign of “just how bad the service is”.
Murphy insisted an independent Scotland must have a functioning tax authority to make sure people pay their way, know where they stand and ensure social and economic policies designed to level up society can be delivered.
He added: “In the UK, we have lived for a long time with governments who have been willing to stand back, have a light touch on regulation and underfund HM Revenue and Customs.
“I was around in 2005/06 when it was formed as a result of the merger between Inland Revenue and HM Customs and Excise, and there was one reason for the creation of that and it was to cut costs. There was 100,000 staff in 2006 is it’s now about 60,000.
“I got a reply to a letter the other day, it took three and a half years. That’s how bad the service now is.
“We need a functioning tax authority in Scotland to give people certainty about where they stand, to make sure everyone pays the right amount of tax and to ensure that therefore the social and economic policies which the tax system of a country is critically able to deliver. It has to function well to do that.”
Murphy – who spoke at the Scottish Sovereignty Research Group conference in Dunfermline last month - also offered an explanation as to how an effective tax system would ensure the Scottish pound had value.
He added: “One of the biggest questions I’m asked is simply how do we make sure that the Scottish currency is used? Why will people use it?
“People will have to use the Scottish currency – if the Scottish Government decides to have its own currency - for one straightforward reason and that is that the Scottish Government will say you must pay your tax using the Scottish pound, and because you have to pay your tax bill in Scottish pounds, two things follow.
“First of all, no business will take the risk of trading in another currency because the risk of trading in one currency and owing the tax bill in another will be too big, and the same thing is true with regard to people.
“So the reality is the biggest reason why we need a functioning Scottish tax system is to force the use of the Scottish currency into everyday operation and at the same time that tax system has to be very clear and effective, much more so I would suggest than the UK system is now which only collects about 90p in the pound of everything that is owing.”
“What we need in an independent Scotland is strong, macroeconomic control of the economy of Scotland because if it [the Government] was to actually say we want to ensure everybody pays their fair rate of tax because we want a positive redistributive tax system that reduces inequality, then it must make sure that everyone pays and that requires Scotland to have a very different political and economic approach to tax.”
