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Report from Glasgow on ALTER fringe

October 6, 2014 2:55 PM
By Tony Vickers

Report on ALTER's Glasgow Fringe meeting 5th October 2014: "New Nations, New Taxes?"

Former banker, Scot and nephew of Malcolm Bruce MP James Oates - Chair of the British-Estonia chamber of commerce - spoke about Estonia's tax system at ALTER's fringe on Sunday, to an audience that included the Guardian's Michael White. James was followed by ALTER Vice Chair Dr Tony Vickers, bringing us up-to-date with prospects for Land Value Tax in Scotland and the UK.

Among the features of tax systems where Estonia shines a beacon compared to UK is the cost of tax administration and the number employed in tax collection. Whilst we have more tax inspectors than soldiers in Britain and the longest tax code in the world, Estonia's cost of tax collection is more than ten times less per unit collected than ours - and a far lower proportion of GDP is clawed back than in Britain. Britain spends more on tax collection (£20bn/yr, including what taxpayers pay their advisers) than the entire GDP of Estonia!

Estonia has a 'flat tax' of 21% on earned income, with a tax-free allowance about one third of average earnings. 99.7% of tax returns are filed online and businesses pay no tax on undistributed profits, allowing enterprise to flourish unhindered. The national economy is debt-free and it takes only minutes to set up a company, in a society that has become totally cyber-based.

Lib Dems were delighted to hear that both the government and main opposition are 'Liberal' parties but most of all that there is almost no controversy about Estonia's tried and tested land-value based local tax, which is collected by the state but set by councils. This is the model which ALTER is now promoting within the UK - not just among Lib Dems but cross-party.

Tony reported on a Colloquium he had recently helped to organise at the HQ of the Royal Institution of Charted Surveyors (RICS) of which he is a member. Experts had concluded that LVT could replace all property taxes in Britain but that more work is needed to develop an appropriate land valuation methodology and land information: 'cadastral mapping'. However Scotland is politically in a very good state to start implementing LVT now: existing devolved powers under the Scotland Act 2012 don't require any support from Westminster MPs to be exercised.