The recent disclosures over Prince Charles’ improbable status as ‘Duke of Cornwall’, and the fiscal advantages conferred by his title in running the 9-figure Duchy of Cornwall, Inc., shine a light on the archaic UK tax code and the myriad of exemptions, loopholes, and grey areas which have been a major cause of the current UK economic crisis and deficit.
Since its founding in 1337 under Edward III, the Duchy of Cornwall has served as an opaque fund to subsidize the lifestyle of the King or Queen in waiting. There is zero transparency, it pays no corporate or capital gains taxes, and yet the Duchy manages businesses and performs numerous public functions.
When ‘Lord’ Berkeley refers to the Duchy of Cornwall as a ‘feudal anachronism’, you know there is a problem. Unfortunately, one could say the same about the entire Westminster system.
Questions on tax fairness are by no means limited to the arrangements of the Royal Family. The neo-liberal orthodoxy that has prevailed since Thatcher has not only decimated the perceived civic duty to pay taxes, but also shrouded the tax code in secrecy and filled it with loopholes to be exploited by highly-paid accountants. Why do Starbucks and Amazon pay virtually no corporate tax, while the rest of UK citizens pay large chunks of their income to finance the state?
The loophole-ridden UK tax system, coupled with massive tax cuts for the rich and corporations, has decimated public finances, leading to the massive deficits and austerity measures the UK is currently experiencing. The seething anger of UK taxpayers watching their taxes increase and income diminish while their benefits are cut is entirely justified. If Scotland votes to remain in the UK, this will be a permanent condition.
The continued existence and financial opacity of the Duchy of Cornwall, among innumerable other enfeebling characteristics of the tax system, clearly demonstrate the need for Scotland to completely abandon UK policy on taxation upon independence.
A ‘yes’ vote will afford Scots the opportunity to completely recast their tax policy to make it transparent and fair. It will also allow them to construct a self-regulating revenue system that finances the Scottish government’s activities into the future without deficit spending.
Scots will get full benefit from their petroleum and whisky revenues, to the tune of hundreds of billions of pounds per year. Scots can spend this money to better their society much more effectively than Westminster ever will.
The UK government has asserted that Scotland was ‘extinguished’ as a state in 1707. If an independent Scotland is indeed a ‘new’ state, with the UK being the ‘continuing’ state, Scotland will begin independence with no debt, the opportunity to toss the 14,000 UK treaties in the bin, and the chance to negotiate its own international relationships in the most advantageous way possible.
It may be that post-referendum negotiations upon a ‘yes’ vote result in Scotland assuming its population’s share of the UK debt and dividing its membership in the EU and other institutions before the rUK bolts after 2017. If so, Scotland can pay off its share of debt within 10 years through full control of North Sea oil revenue. Scotland will also be able to establish a sovereign wealth fund which will help weather the inevitable economic storms ahead. Ask Norway how that works.
As an independent Scotland abolishes aristocratic privilege within state affairs, ‘noble’ tax-loopholes and opacity will disappear too. ‘Lords’ and those with other feudal titles will be upgraded to full citizens, subject to the same laws and taxes as everyone else.
Crucial to the legitimacy of an independent Scotland is the fairness of the tax system. I read recently about Alex Salmond offering lower corporate tax rates than the UK to encourage investment. While lower taxes may have some role in attracting investment, the entire tax system must be made utterly fair and transparent, with precious few exemptions.
An independent Scotland could impose a flat or mildly progressive rate of taxation on all revenue transactions: VAT, income, corporate, and all others. This would not only make taxation predictable and stable over the long term, but also eliminate a major incentive for lobbying and corruption: the constant quest by special interests for tax and regulatory exemptions.
It is important to attract investment, but it needs to be the right type of investment: from companies who wish to be good corporate citizens, rather than those merely engaging in a lucrative race to the bottom. An independent Scotland can create a business climate in which companies are attracted by a fair and predictable tax system.
Fair taxation is but one element that will make an independent Scotland a more just and egalitarian society. Scots must take this opportunity in 2014.
First published on Newsnet.scot on 18 June 2013 as part of a series of articles on constitutional issues published between July 2012 and Sept 2014.