Tax and investment
ALBA recognises that it is impossible to build the kind of Scotland we aspire to without investing in it. We cannot have Scandinavian-quality services with low rates of tax. But ALBA also recognises that Scotland's tax powers are woefully limited, almost designed so they are difficult to use meaningfully. The money which would be raised by tinkering with the available income tax powers is just nothing like enough for the tasks ahead. In an independent Scotland we can reform our entire tax system; in devolved Scotland we're too easily stuck in virtue-signalling.
So ALBA will stick to pushing for what makes a difference, not what makes us look good. Tax powers may be limited but in the world right now there is no shortage of available capital investment where it can deliver reasonable rates of return. This manifesto is full of investment opportunities which deliver sufficient returns – from building new houses to a new generation of care homes that are both better and more cost-effective, from components for renewable energy to timber products for construction, from Scottish food for free school meals to supporting small Scottish businesses. To unlock this, we need Scotland's new National Investment Bank to be given the ability to capitalise from global markets, so we must demand this power from Westminster to finance a recovery from COVID-19 of a scale required to meet the scale of the post pandemic economic shock.
The investment bank will work with the Scottish Futures Trust and a Scottish National Renewable Corporation (SNRC) to raise the capital required for investment projects to recover and transform Scotland’s economic performance.
That will be at the heart of ALBA’s recovery plan.
The SNRC will be capitalised using dividend gains from public investments in Scotland’s renewable energy industry to accumulate into a generational, sovereign wealth fund along the lines of the Government Pension Fund of Norway. This will allow the Scottish people to benefit from the enormity of our natural resources (onshore and offshore) while providing the collateral required to borrow cheaply and invest wisely. The Norwegian Pension Fund drawn from the country’s last 25 years of hydrocarbon revenues now has an ownership stake in more than 9,000 companies worldwide, including Apple, Nestlé, Microsoft and Samsung. On average, the fund holds 1.4% of all of the world’s listed companies.
Scottish renewables onshore and offshore are now in the position of oil and gas circa 1970, with major opportunities ahead but requiring the political imperative to secure these resource benefits for the nation. To that end, ALBA also proposes the setting up of a Scottish National Renewable Corporation. The SNRC would receive a public shareholding in all licensed energy projects of 30 MW. The SNRC would then accrue revenues that are covenanted to underpin the new investment funds.
Thanks to decisions taken ten years ago in grid capacity, Scotland is now effectively self-sufficient in renewable electricity generation. There is no need for expansion to stop there. With enhanced grid connections, the move to electricity in transportation and a policy of bringing energy intensive projects close to the competitive power production, Scotland should aim to produce double or treble its current renewable capacity within ten years.
ALBA proposes a further measure of resource taxation to benefit the people; Scotland's land is a wonderful and under-used productive asset which is entirely untaxed. This should change. Scotland should introduce a land value and use tax which taxes that land to raise revenue from those who can afford it, and to incentivise the productive use of our land. This is a tax aimed at ending the scandal of wasted hoarded land assets being “banked” instead of released into productive opportunities.
Ambition-signalling, not virtue-signalling.
No transformation without investment.
Bring the world's capital investment to Scotland – the right way and let Scotland’s land assets be released into productive use and development.
So ALBA will propose:
- The Scottish National Investment Bank to be given dispensation to capitalise from international capital investors and pension funds
- The introduction of a development land tax in Scotland, with carefully-calibrated exemptions to protect Scotland's farming community but aimed at bringing assets, currently hoarded, into productive use.