- Join our call for AGR by Subscribing to our newsletter, or register your interest with us at email@example.com and we’ll keep you informed of progress.
- Copy and paste this text into a letter to your MSP:
Scots are calling for new thinking. Scotland’s public service budget is now under so much pressure that alternative revenue strategies promising better outcomes must be properly and fully examined. It is the fundamental duty of parliament — if it purports to work in the interests of Scotland and its citizens — to examine in detail ideas put forward claiming to offer significant improvement on today’s highly unsatisfactory budget outcomes.
Annual Ground Rent
Proponents of AGR (Annual Ground Rent), including respected economists, claim it will add £billions to the Scottish economy. Parliament is obliged to test this claim. To do so, two pieces of missing voter information are required. Information on which voters may evaluate how well they are governed and with which they will be equipped to mandate improvements. Today I am asking you to give voice in Parliament to my demand for the answers we all need.
As you may know, raising revenue from unearned rents cancels the £billions of damage caused by taxes on incomes, enterprises and consumption. Economists such as Holyrood’s own Nobel Prize winning economic adviser, Professor Joseph Stiglitz puts it like this:
“…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) pp 212-213.]
The first piece of information required by Parliament and voters alike is how much unearned economic rent there is, that could be collected with AGR. Parliament needs regular re-assessments of the rents being generated by the efforts of society in Scotland. Net taxable income provides the best single numerical indicator of the health and wealth of communities at all levels – local, regional and national. HM Treasury and the statistical agencies have chosen not to compile data on economic rent. That omission needs to be corrected. I therefore ask that you take forward my first demand.
Demand No. 1: Parliament will publish an annual assessment of economic rent generated from all sources in Scotland.
My second demand is closely related. I allude above to the damage caused by current taxes called ‘deadweight losses’. Income Tax, for example, costs the Scottish Economy at least £1 in addition to every £1 taken by the Inland Revenue.
Demand No. 2: Parliament will command an assessment of the deadweight losses inflicted on Scotland by Acts of Parliament at both Westminster and Holyrood.
Without this information, the performance of Parliament cannot be objectively assessed, and elected representatives cannot be held accountable. Parliament must enact legislation which orders that, on an annual basis – when the Budget is submitted to the Scottish Parliament for scrutiny – the Cabinet Secretary for Finance will publish revised statistics on the rents generated within Scotland over the previous 12 months; and on the increase or decrease in the deadweight losses arising from proposed changes to tax rates.
Armed with these two pieces of information, full evaluation of the AGR fiscal instrument and how it compares with alternative strategies can be undertaken. At which point Scots may choose to mandate the reconstruction of their public finances.
I look forward to your reply.