Scots could lose by setting own income tax
Most People Can’t Afford To Move Home To Avoid Tax. But The Rich Can, And They Pay Most Tax. The Scots Should Be Careful Before Raising Taxes.
You have to be very rich to move to Monaco to escape UK taxes but you need to be only fairly rich to consider moving south across the Scottish border. England may look like a high-tax state to those who’ve moved to Monte Carlo, but it will look like a tax haven to Edinburgh’s affluent.
Already one per cent of UK adults pay almost 30 per cent of all income tax (and that’s after the seriously rich have moved to the Mediterranean). If Scotland’s elite move south, the ratio could be even more distorted.
Given the short distance across the border to a country that speaks the same language and has the same currency, the temptation to pay tax in England rather than Scotland will be great when Edinburgh can set its own tax rates and tax bands.
The greater danger, for Scotland, is that not only does it lose the tax income but that it also loses the jobs as people not only live south of the border but work there too. The Willies – Work in London, Live in Edinburgh – could reverse their commute.
There are other problems in having fiscal independence without monetary autonomy – setting tax rates but not interest rates or exchange rates – but if the tax revenue has disappeared, even fiscal freedom is a problem.
