FINANCE Secretary Derek Mackay acknowledged last December that an increase in income tax rates would pose a “risk to the economy”. Now the Scottish Government seems to be proposing to do just that (“Sturgeon eyes up tax rises”, The Herald, September 6).

Taxes on production and consumption inevitably have a destructive effect on economic activity and therefore shrink their own tax base. But there is a source of revenue, as yet barely tapped, that is free from such distortions – land values. A tax on land values would be based on the annual ground rent of all land parcels.

The Scottish Government’s Council of Economic Advisers includes two Nobel prizewinning economists, Joseph Stiglitz and Sir James Mirrlees, both of whom have recognised the benign effects of land value taxation. Professor Stiglitz observed that “it is highly efficient to tax rents because such taxes don't cause any distortions ... a stiff tax on all such rents would not only reduce inequality but also reduce incentives to engage in the kind of rent-seeking activities that distort our economy and our democracy” (The Price of Inequality: 2012). Sir James noted: “Taxing land ownership is equivalent to taxing an economic rent—to do so does not discourage any desirable activity… Economic activity that was previously worthwhile remains worthwhile. Moreover, a tax on land value would also capture the benefits accruing to landowners from external developments rather than their own efforts” (Tax by Design: for Institute for Fiscal Studies 2011).

That final sentence is important, as is Prof Stiglitz’s reference to “rent-seeking activities”. Land values are distinct from the value of buildings and other improvements, and are entirely a product of community demand, further enhanced by the provision of publicly-funded services and infrastructure. They are the natural source of public revenue and should be recycled into the public purse, not allowed to flow into private pockets. Unlike oil revenues they will never run out, and unlike our current taxes on production they cannot be dodged – you cannot hide land or move it to a tax haven.

The Scottish Parliament has worked commendably hard to achieve a considerable measure of tax autonomy, yet the Government seems reluctant to use its new powers constructively. Instead, it seems happy to stick with Westminster’s toxic taxes and merely re-arrange the deckchairs.

John Digney,

Orinsay, Station Road, Buchlyvie, Stirling.

MY father was born in 1908, served his time as a journeyman turner, was paid off during the Depression when he worked as a milkman, got back to the tools in 1937 and was a machine-shop foreman when he died in 1967.

Every Budget Day when he came home he asked the same questions; is income tax up and are cigarettes up? A lifelong teetotaller, a rise in the price of alcohol was none of his concern. What did concern him was his acceptance that if public services were to maintained at a satisfactory level, every wage and salary earner should contribute to the public purse according to his or her ability to pay, hence his annual inquiry.

If we believe that paying taxes is a moral as well as a fiscal duty, whether or not differences in earnings should be reflected in contribution rates rather than the imposition of a flat rate per pound deduction on all those earning on or above the average national wage should be given proper consideration.

Duncan Macintyre,

2 Fort Matilda Terrace, Greenock.

HOW ironic that on the day the First Minister calls leaked UK government proposals on immigration “morally bankrupt” ( Sturgeon attacks leaked paper on immigrants as morally bankrupt”, The Herald, September 7), another leaked report, this time by a police watchdog, Her Majesty’s Inspectorate of Constabulary Scotland (HMICS), concludes that the Scottish Government’s planned merger of Police Scotland and the British Transport Police in Scotland was “entirely” a political decision, without a proper supporting business case (Police watchdog: Merger ‘entirely’ political decision”, The Herald , September 7).

The First Minister decided the Scottish Government must break up the British Transport Police that has been working perfectly well north and south of the Border, not because it should, but rather because it could. Removing the Scottish arm of a service that carries a British identity in its title, of course suited the SNP’s core ideology, but the blatant lack of rational analysis of the pros and cons of such a move displays an arrogant disregard for proper process. Anything “morally bankrupt” in that First Minister?

Keith Howell,

White Moss, West Linton, Peeblesshire.

In the first week of the new parliamentary session, both at Holyrood and Westminster it was interesting that the Westminster Government’s welfare policies affecting millions should came under scrutiny with immediately effect. The Scottish Parliament held a debate supporting a call by Citizens Advice Scotland to stop the accelerated roll-out of Universal Credit across Scotland, a policy which is harming so many vulnerable and needy in society. This debate secured cross-party support for Citizen Advice Scotland, with the exception of the Conservatives; not surprising. But what was surprising, was the absence in the chamber of the Conservative Scottish spokesman on social security, Adam Tomkins. Surely a case of action speaks louder than words: unable to attend such a crucial debate for so many, unable to come to the debating chamber and defend his party’s record on the roll-out of Universal Credit. Is this a sign of things to come from the main opposition in Scotland?

Catriona C Clark,

52 Hawthorn Drive,

Banknock, Falkirk.

ONCE again the range of letters you published today (September 7) made for an enjoyable read.

Those that encapsulated the Scottish Parliament missed one key point: that our devolved parliament is designed for consensus politics, unlike the confrontational style prevalent at Westminster. However this has yet to permeate through the mindset of those two major London0based parties representing Labour and the Conservatives.

The letter from Gordon Casely reminded one of Lord Robertson's favourite party piece on becoming Secretary General of Nato. He used to comment at gatherings of his party faithful, that despite being a Nato general, he still received more salutes as an officer of the GMB trade union.

With his comments on devolution and independence it now appears he is the joke rather than the joker.

William Maley,

Masonhill Road, Ayr.