Scottish independence: Tax alone 'cannot tackle inequality'

 
Montage, Nordic country images The report highlights the challenge of achieving Scandinavian levels of equality

Academics at Stirling University have warned major change would be needed to reduce inequality in Scotland using taxation and government spending.

They said, given "relatively high levels" of income inequality in Britain as a whole, achieving a substantial reduction would be "challenging".

The Stirling economists suggested this would be true even if Scotland had full control over taxes and spending.

They warned income tax powers were a "relatively blunt tool".

The Scottish government has argued independence is needed to effectively tackle inequality.

The pro-union Better Together campaign claimed the report undermines the Scottish government's argument.

Stirling University researcher Dr David Comerford and research assistant David Eiser point out in their report that Nordic countries are "often seen as operating the type of social-democratic model that an independent Scotland might wish to follow", but said that inequality is higher in Scotland than in these nations.

Inequality in Scotland is around five percentage points higher than it is in Nordic countries, according to the the GINI index - which is commonly used as a measure of inequality of income or wealth.

Tax thresholds

Putting a penny on the Scottish rate of income tax, when Holyrood gets power to do this in 2016, would only reduce this by about 0.2%, the report said.

Further devolution of powers over income tax - such as the ability to vary tax thresholds - could provide the Scottish government with "an opportunity to more effectively use fiscal policy to influence the income distribution".

Start Quote

The conclusion is that if we want to look like Scandanavians, in terms of income distribution, we would have to do a lot more than they do to compensate for the inequalities within pay rates set by the market”

End Quote

The report also said control over benefits for those who are out of work and those on low incomes "would provide other important levers with which to influence inequality", adding these could be used to target specific groups of the population.

But it warned major changes to tax levels in Scotland could result in higher earners leaving the country, as it concluded: "It is difficult for a small, open economy to implement substantially different redistributive policy from that of its close partners."

Mr Eiser said: "The Nordic countries have lower levels of inequality than Scotland, not only because they have more progressive tax and benefit policies, but also because the level of inequality in income before taxes and benefits is much lower than in Scotland."

Dr Comerford commented: "An independent Scotland would have access to fiscal powers with which it could influence inequality more directly than it can at the moment.

"However, achieving the level of inequality reduction the Scottish government desires through fiscal policy alone would require major policy change.

"This could be problematic because Scotland's high degree of integration with the rest of the UK means such policy change could trigger migration between countries."

Policy tools

Deputy First Minister Nicola Sturgeon welcomed the report. She said: "This report makes clear that Scotland currently has very limited powers to properly tackle the huge inequality which has seen the UK become one of the most unequal societies in the developed world.

"It also finds that independence will give a Scottish government real economic and social policy tools to address the issue."

The Better Together campaign said it believed the report strengthened their argument in favour of retaining the United Kingdom.

A spokesman said: "This report completely undermines the nationalist argument that leaving the UK would automatically reduce inequality.

"In fact, it says quite the opposite."

 

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  • rate this
    +27

    Comment number 196.

    When will the BBC respond to the independent report form UWS academics which identfies by analysis of over 1 year of data that the BBC have shown bias against the yes camp? Is this report not worthy of comment by our public broadcaster?

  • rate this
    +3

    Comment number 195.

    Surely to be 'equal' necessitates those beneath the line of delineation to rise to the challenge as much as it is for those above to lower their standards

  • rate this
    0

    Comment number 194.

    The Scandavian countries have amongst the highest overall tax burdens in the world. VAT in Sweden & Norway is 25%, 24% in Finland.

    Is that what the Scots want?

  • rate this
    +3

    Comment number 193.

    50.SAB
    Equality of opportunity - Yes! But we do not have equality of opportunity. If you have good middle class parents, you've got a head start. 18 months by age 5, didn't recent studies show? How do we give the equality?
    A high salary does not mean that a person earns it - BBC exec, banker, tax dodger? Or do you think they did?

  • rate this
    +1

    Comment number 192.

    It is surely morally indefensible to take from those who have, simply to give it to those who 'have not'. Those who 'have' should shoulder a proportionately greater share of the cost of running the country, but taxation should not be used as a weapon. A safety net to protect the 'have nots' from absolute poverty is fine, but do not erode the incentive for self improvement by giving 'easy money'.

  • rate this
    +8

    Comment number 191.

    @182 Assynt

    This report shows that he UK is one of the most unequal countries in the western world. That isn't a risk it is a reality. To say it could never be better when others clearly can do it better is the negative "can't do" mantra that has hallmarked the Better Together campaign.

  • rate this
    +3

    Comment number 190.

    You pay tax to enable the state to meet its obligations and duty of care to you, the citizens. It is not a tool for social engineering, merely a way of giving the state the means to pay for the services that it is employed to provide.

  • rate this
    +11

    Comment number 189.

    UWS found bbc was bias for over a year, ratio of 3 to 2 against the Scottish Government / independence.

    What other supposed national institution jumps at every dubious opportunity to rubbish its own country?

    Every day we have a bbc scare story on independence with no redress!

    Will we get an apology for the misrepresentation of the Irish minster, Lucinda Creighton on EU matters?

    C McK

  • rate this
    +8

    Comment number 188.

    Equality is not simply a definition of what an individual earns, or can potentially earn. The core inequalty (and it applies to all UK regions) is what is removed from the individual by Gvt. If a larger % is taken from less & a smaller % from more, it stifles aspiration & is seen as inequality. Unlike England, the Scots will shortly have the power to dump Westminster & change it. Wish we could too

  • rate this
    +4

    Comment number 187.

    Many things & reasons create inequality.

    Inteligence, physique, used or squandered opportunity, acceptance of personal status quo.

    Areas of UK that provide energy for rest of UK, spewing out coal polution over local communitys, reduced lifespans, but often deviously deflected onto lifestyle choices - thats inequality.

    I never knew such filthy rain existed until I moved to Yorkshire

  • rate this
    +14

    Comment number 186.

    "Comparing BBC Reporting Scotland with STV News, the former seems less balanced and fair to the Yes campaign. Both feature a preponderance of anti-independence statements, a majority of anti-independence evidence and a heavy personalisation of the debate around the character of Alex Salmond with the latter often portrayed as selfish and undemocratic." Dr John Robertson, UWS

  • rate this
    +2

    Comment number 185.

    161.Hunter S Thompson

    England £7,121
    Scotland £8,623
    Wales £8,139
    Northern Ireland £9,385
    North East £8,177 – 111% of UK average expenditure
    North West £7,798 – 106%
    Yorkshire and Humberside £7,188 – 98%
    East Midlands £6,491 – 88%
    West Midlands £7,065 – 96%
    Eastern £6,144 – 83%
    London £8,404 – 114%
    South East £6,304 – 86%
    South West £6,677 – 91%

  • rate this
    +2

    Comment number 184.

    162. Truth logic sustainability the final frontiers

    Why does that make it right though?

    The notion is that some people deserve to have money & luxuries and some don't. 'Hard work' is touted as qualifier, despite the fact that someone could hold down two jobs and earn little. We then just accept that those who 'deserve' it just so happen to be those who already have it and don't want to share.

  • rate this
    +4

    Comment number 183.

    Where do all the people that write these reports come from. Every day, some muppet writes a report and the BBC tells us about it. We'll have a HYS on it, some will care passionately about whatever issue it is, most won't give a hoot. Tomorrow it'll be something equally trivial, and David Comerford will vanish without a trace. Life isn't equal, inequality is just an excuse for politicians to tax

  • rate this
    -12

    Comment number 182.

    As the wheels of the pro-Independence campaign bus continue to fall off...no doubt Mr Salmond & Ms Sturgeon will continue shouting 'it'll be alright on the night' from the bus window.

    They just don't seem to appreciate that their manifesto (sorry 'white paper') needs to be paid for: & the eggs in the oil basket won't stretch that far! Perhaps they should try being more honest about the risks!

  • rate this
    +14

    Comment number 181.

    http://www.bbc.co.uk/news/uk-scotland-scotland-politics-25820250?postId=118471190#comment_118471190

    Chris

    What RATIONAL cause is there to suppose that Scotland would be "more likely to mess up"?

  • rate this
    +12

    Comment number 180.

    No

    Tax alone can not tackle inequality. But the study in question did say that it can make a difference. A Scotland where we have control of our own country can at least stop inequality getting worse as it currently is under Westminster

    Yet more bias reporting from the BBC in the face of a report from University of West Scotland pointing out systemic anti YES bias from both the BBC and STV

  • rate this
    -13

    Comment number 179.

    Without inequality it would not be worth getting up to go to work. The whole point is to see some results from one's labours rather than having to give 40 or more % away.

  • rate this
    -1

    Comment number 178.

    54.wfhflyer
    I agree - government figures show when we were pretty much fully employed in 2002, the number of people who hadn't worked for over 5 years (and had made a life style choice to live on benefits) was just over 70,000. Since we pay them, we know who they are, and it ought to be easy enough to make them work, or jail them. Everyone else will work given a job.

  • rate this
    +7

    Comment number 177.

    166.where am I
    Where do I start? How about the ability to decide our own spending priorities rather than having to go along with those of the SE of England?

    And please don't be so disingenuous as to suggest that taxation and borrowing are the only powers we currently don't have. Will be charitable and assume that was an innocent mistake rather than a deliberate attempt to mislead.

 

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