Pick A Card

You’ve probably guessed by now that I’m no economist. When I listen to the conflicting stream of drivel so many of them spout, I’m proud of that. However, I am a thinking voter and like to judge for myself in as far as I can with out a BSc. I’ve also learned to think of Paul Daniels whenever the British Treasury tries to tell me something. It’s amazing how they make things appear and disappear at will while wearing a fixed smile.

Today we’re told for example that the SNP plan of cutting corporation tax will take money out of the national account and will lead to tax increases or cuts to services. (Take your eyes off Debbie. She’s the distraction). That seems plausible enough…cut the tax rate and get less cash in. Our other glamorous assistant, Danny helps to convince us by saying the same methodology that led to this deduction was used by the Treasury, so it must be British copper-bottomed, fair and accurate.

But here’s where they pull the silk cloth away and, hey presto, what you thought was true isn’t.

It’s only two weeks ago that the Chief Magician Osborne pulled his magical stroke by declaring that he had put in place a quiet revolution by systematically cutting corporation tax to one of the lowest in the western world, from 28p to 23p, next to 21p and down to 20p over the next two years. But surely, you ask, the Treasury says to Scotland that cutting this tax rate will lead to budget cuts and loss of services, so why doesn’t that principle apply to London’s Magic Circle, too?

The answer is that it originally did. Analysis by HMRC only considered the direct effecton the public purse without taking into account the wider economic impact.

When they were factored in it was realized that the cut led to higher investment, economic growth and wage rises, according to the Chancellor. So he told HMRC to change its methodology to suit him. Asked why he ordered HMRC to change its methods at this time, Mr Osborne said he “wanted to begin a quiet revolution in how people think about these things” and they would apply the same principle in future to other measures like raising personal allowances and scrapping fuel duty rises. He calls it “dynamic modelling”.

It’s what the rest of us call “common sense”. There is a consequential effect which compensates for the cut. If you are a retailer, you cut the price in order to sell more. Simple.

So it’s sleight of hand for the same Treasury not to apply this so-called dynamic modeling to Scotland’s tax cutting plans while using it for their own. But that would be mature and intelligent and aid the debate and we can’t have that when the game is to lie, lie and lie again to keep Scotland in the British state. How I’d love us to pull a rabbit out of the hat next September.

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0 thoughts on “Pick A Card

  1. Westminster finally doing what AS has been telling them for years.Cut corporation tax and start spending on infrastructure projects. Whatever next,additional spending on free child care ?

  2. Good point Derek but this morning GMS let Danny off the hook when the interviewer failed to follow up on the question of budget savings on reduced defence spending in an independent Scotland. He was floundering and waffling on but did not answer and a follow up question was needed.

    • I agree, Tommy but was he not clever to cough and choke when he couldn’t answer the question then maintain he hadn’t heard the second part when there wasn’t one? Was G.O. screaming in his ear, “Quick, blame someone, any one, any thing……yes, even the BBC !! You’re in a radio car….remember? ” ( I doubt they won’t chance feeding him to Nicola, with or without his brave attempt at an educated London accent.)

      • Yes, he sounded inept, foundering around. I felt momentarily less irritated by that interviewer’s manner, and raised a small cheer for journalistic resourcefulness at BtBCScotland. What fantastic targets they have if only they would use their gumption. If they really do have any, I imagine they’ll be thinking they’d better start using it soon.

  3. dynamic osbourne, my ass.

  4. I am a uneducated Panda but, how can there be a black hole in the SNP’s income tax, corporation tax and airport duty tax when we do not get these at the moment? They just disappear into the Wastemonster slush fund. As Scotland is a net contributor to the Exchequer anything we get from these taxes post independence would a net positive. After that, other economies, like Defence (Trident, carriers and other cock ups) BBC taxes, Motor Vehicle taxes, petrol taxes and oil taxes, VAT will also flow into the Treasury in Edinburgh?

    Again the HM Treasury policy wonks are extrapolating Scotland from their UK continuing model.

    Economically illiterate.

    If they are not doing this deliberately, and believe this keich it could go some way to explain how we got into this mess, in the first place.

  5. Look! there’s a squirrel!! Yeah, they think we don’t notice. ;-)

  6. The point on the graph where the demand and supply curves cross is economic equilibrium. For instance if you make say 100 gadgets and only a few sell then drop the price. if the gadgets are then all sold in minutes, sorry your revised price was too low. Ideally you want just one gadget unsold, or advising just a few customers “sorry sold out”. A high turnover doesn’t mean a high profit margin.High turnover and little or no profit enters you into the ” busy fools” category. Consider the UK “we are the sixth(?) largest economy in the world”. Aye and your trading at a loss. The UK’s solution is to cut overheads. Directors don’t reduce the reward benefits for directors when seeking ways to return to profit, they reduce management and workers rewards. And they sack managers, and mangers sack workers – to cut overheads.Kind of disposing of the tools you need to make the gadgets to sell. It truly is urgent that Scotland manages her own affairs.

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