JOHN Swinney has set out his package of powers for "priority devolution" in a document titled Beyond Smith. It is arguably the most significant piece of work produced by the Scottish Government since the General Election.
The 16 pages go through the now-familiar list of powers the government wants to be handed to Holyrood as part of the new Scotland Bill.
They include responsibility for the minimum wage, employment support and a wide-range of working age benefits, plus control over corporation tax, National Insurance contributions and capital gains tax.
But what makes Beyond Smith so interesting is that for the first time Mr Swinney has given some clear indications of how he would use these powers if the SNP succeeds in amending the Bill now going through Parliament.
It may not contain manifesto-style commitments or cast iron guarantees but it leaves little doubt about the thrust of the government's thinking.
For example, discussing the Work Allowance (the amount people can earn before their Universal Credit is reduced) the document says "it could be altered to provide additional support to certain groups" such as lone parents. A heavy hint, if ever there was one.
One of the most eye catching suggestions was to offer generous tax breaks to wealthy entrepreneurs. Some SNP supporters were aghast at this, incredulous even. "Is this true?" one tweeted when The Herald reported the story. "Has Nicola Sturgeon confirmed this?" said another.
But Beyond Smith could not be clearer. "Capital gains tax could be used to create targeted tax
incentives to boost entrepreneurship
to redress Scotland's lower rates of
entrepreneurship and business start up," it says.
It suggests a review of the existing "entrepreneurs' relief" scheme, which cuts capital gains tax from 28 per cent to 10 per cent for entrepreneurs who sell their business. The lower rate applies to lifetime gains of up to £10million.
The Scottish Government cautioned against interpreting this as a sure sign it wanted to make the scheme more generous (though it didn't rule that out) but it's hard imagine that entrepreneurs would be incentivised by a less generous tax regime than they enjoy at present.
The document contains similar clues about what Mr Swinney would do with corporation tax and employers' National Insurance contributions. On corporation tax, it points to more generous tax breaks for capital investment, especially in sectors such as renewable energy, and for research and development.
All companies could expect a reduction in the level of National Insurance contributions they pay. Mr Swinney's proposals suggest raising the lower earnings rate - the point at which employers start paying NICs - and hint strongly at integrating National Insurance and Income Tax. This genuinely innovative reform should come as no surprise, having been proposed by Professor Sir James Mirrlees, a member of the Nicola Sturgeon's Council of Economic Advisers, in a groundbreaking report for the Institute for Fiscal Studies think tank in 2010.
Looked at in the round, the Finance Secretary's tax plans appear to be geared to giving Scots businesses and business people a competitive advantage. The approach is perfectly orthodox, if rather at odds with Nationalist rhetoric about the UK's "failed economic model". If that's why supporters took to Twitter to voice their concern, heaven only knows what they thought when they heard Stuart Hosie addressing the Commons on the day Beyond Smith came out. Tax competition within the UK would be a "good thing," the SNP's Treasury spokesman and deputy leader told MPs.
STUC assistant secretary Stephen Boyd - who welcomes the SNP's call to devolve trade union and employment legislation - described the tax plans as "more of the same". The ideas were "pretty much
consistent with the UK approach to policy making over the past 30 years. The implication across the board is these taxes will be cut," he said. There is scepticism about the idea on the left but
Mr Swinney believes foregoing some revenues in the short term would be more than compensated in the longer run as Scotland's economy outpaced that of the rest of Britain.
It looks unlikely Mr Swinney will win his "priority devolution" but the argument, at least, is important to the SNP. If it is to convince more people that Scotland could move full fiscal autonomy without blowing a ruinous hole in the public finances, it must first convince them it could deliver an economic boom.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article