Prof. Paul Hallwood’s (with Professor Ronald MacDonald of University of Glasgow) Press Release on Wednesday of his position paper (submitted to the Smith Commission) outlining a new fiscal settlement for Scotland – following September’s Independence Referendum – had within 24-hours received widespread coverage in the Scottish Press; five newspapers covered it in six reports or editorials. The headlines of the news pieces were: “No Scots bail-out by Westminster, academics warn” (Daily Express), “Pressure mounts on Labour to review tax proposals” and an editorial “Party labours with its powers plan” (The Herald), “Scotland should have to wait 15 years for a bailout it its spends too much” (The Scotsman), “Tight rein on spending needed” (Aberdeen Press and Journal), and “Put up and Shut up” (Daily Record).

An excerpt from the Press Release is below.

A copy has been lodged with the Smith Commission on Scottish finances

 

NEWS RELEASE

22 October 2014

WHAT IS THE RIGHT BUDGET CONSTRAINT FOR SCOTLAND?

An analysis by Professor Paul Hallwood (University of Connecticut) and Professor Ronald MacDonald (University of Glasgow)

 

Highlighted recommendations include:

• Block grants from Westminster should not be elastic in the sense that if the Scottish Parliament cannot finance its chosen spending level out of the existing block grant and own-sourced taxes, the block grant is not automatically or quickly increased.
• Any extra taxes raised by Scotland are not shared with Westminster.
• If the Scottish Parliament’s tax policy led to a smaller tax base (a shrinking economy), it should have to live with that during the extended period of non-adjustment.
• Borrowing by the Scottish Government should be regulated.

 

The fiscal design proposals of all the main Scottish political parties are examined against these criteria. Only those of the Scottish Liberal Democrats and Scottish Conservatives are shown to be workable.