Let the Tax Competition Games Begin!

It is not right to say that this is the last United Kingdom budget. Far from it. Nevertheless, the times they be changing. Due to an unfortunate coincidence of parliamentary timing (though doubtless some will see a conspiracy in this) the Scotland Bill will be agreed today. It will, naturally, be lost amidst the budget brouhaha but it is a significant moment nevertheless. The SNP have made their peace with the coalition, recognising that the Calman Commission’s recommendations, imperfect though they may be, are another step towards a more independent future.

Significantly, the Scotland Bill accepts the proposition that it is perfectly feasible, and perhaps even proper, for the different parts of the United Kingdom to levy different rates of income tax. It increases the proportion of government spending in Scotland that may be levied by the Scottish government at Holyrood. The block grant will be cut and Scottish income taxes will be cut by 10p in the pound.