Thank you for having me—ICAS is pleased to be invited.
As an overall comment, I say that the clauses do what Smith sets out to do in the main. There is plenty more for us to discuss as we go along and go further down the line.
The income tax proposals offer a brave and imaginative path between using the existing Her Majesty’s Revenue and Customs machinery and legislation while building on the Scottish rate of income tax and bringing further powers into the Scottish Parliament. Smith addresses all three of those issues. On the other hand, given that those three elements are sitting together, the parties will need to interact afterwards, so we might want to return to the allocation of responsibilities.
There is a small bit about capital gains tax. That is just a necessary block to sit with income tax; I do not think that capital gains tax itself is affected, but it is understandable why it is there.
It is fine for the two small taxes to be devolved. They are relatively stand alone and are like those taxes that have already been devolved; they are quite easy to devolve.
The assignment of VAT offers more opportunity for discussions on how that might be calculated. It slots in with the difficulties with the fiscal framework and some of the no-detriment issues. I am not quite sure how you would calculate it. If you take a rather general estimation process, that will not marry up with and give you a true reflection of the Scottish economy. However, the better it marries up with the economy, the more difficult it is to calculate. Such elements might run through how you calculate no detriment.
I will make one other opening comment. The package offers various taxes to be devolved and different types of devolution. We have what I would call full devolution of the smaller taxes, such as the aggregates levy and air passenger duty. Those will come here lock, stock and barrel; they will be switched from Westminster for Scotland. It will not quite be that you can do what you like with them, but you know what I mean. They will be Scottish—full stop.
Then income tax is partially devolved, so there will be joint responsibilities, as Professor Muscatelli suggested. The UK will still have responsibility for a large proportion of it—there is all the HMRC legislation—so Scottish powers will need to interact with that and they will have to mesh together. There is also the welfare side of it, which needs a bit of management.
VAT is completely different because it is an assignment as opposed to having anything much to do with Scottish powers per se. One issue that comes out of that for me is that I am not sure that a lot of people among the public have a full understanding of what Scottish taxes are or the fact that they are different and have different powers attaching.