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Business School academic enters Scottish devolution debate

Simon James from the Business School has co-authored a new study on the implications of Scottish devolution on the tax system. Commissioned by the Institute of Chartered Accountants (ICAS), this new research sheds light on possibilities for taxation in Scotland following the Independence Referendum on 18 September.

The research points out that, irrespective of the referendum result, it is likely that Scotland will eventually have more say over its taxes. In line with the neutral stance adopted by ICAS, this report takes no view on the desirability of the various options, but rather sets out to help establish the factors that should be taken into account if change is to be successfully achieved. 

Simon James said “This research suggests that the tax implications of Scottish independence or further devolution are more extensive and complex than might be widely thought.”

Whilst focusing on Scotland, some of the issues raised in this report are also relevant to other jurisdictions which are considering some form of devolution of taxes or the establishment of a new tax system.

The project sought to address, by way of a review of existing literature and interviews, issues including:

  • The suitability of the current tax system for Scotland
  • Practical issues arising in developing and administering a new tax system or changing the current system
  • Determining factors for designing a new system and overlaps with potential changes made under further devolution
  • Time required for implementation
  • Risks and issues

The report focuses on the complexity of tax changes under independence or further devolution and highlights issues which need to be considered by politicians.

Whilst many of the issues arising under further devolution or independence will be the same, albeit to a different scale, other issues identified are specific to independence, such as the design of a new tax system and the status of double taxation agreements.  

Michelle Crickett, Director of Research at ICAS concluded: “This comprehensive and wide ranging piece of research identifies the factors which need to be considered by government if there is to be further tax raising powers in Scotland, under either devolution or full Scottish Independence.  We hope that the report will assist those involved in any future devolution of taxes to Scotland whatever the result of the ‘vote’ in September.”

This latest work was undertaken for the Research Committee of ICAS by Jane Frecknall-Hughes, Professor of Revenue Law at the Open University Business School; Simon James, Associate Professor in Economics in the Department of Organisation Studies at the University of Exeter Business School and Rosemarie McIlwhan, Lecturer in Law at the Open University Law School.

View the full report:

The tax implications of Scottish devolution or further devolution

Date: 3 June 2014

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