Monday, 9 December 2013

Scottish independence vs food vs a fair corporation tax

Another day, another piece of garbage anti-Scottish indpendence chat, except this time one with broader ramifications; it turns out that besides causing the four horsemen of the apocalypse to rise up and grind the very earth into cinder, Scottish independence would also make your weekly supermarket shop more expensive. Crivens. The “argument” presented for this is as follows:

“in today's FT, which reports that bosses of three of the four biggest supermarket chains are warning that food prices in an independent Scotland might well be higher than in the rest of the UK. ….Scotland has a large dispersed population, so transport costs - logistics - tend to be higher in Scotland than in England.
Scottish people eat relatively less fresh food than the English, and fresh food is much more expensive to transport and store (the logistics of supplying fresh food are highest). So it is relatively more costly to provide fresh food in Scotland….

….. at the moment, the big four supermarket groups - Tesco, Sainsbury, Asda, Wm Morrison - absorb these differential costs in a pan-UK pricing policy. They take on the chin that the intrinsic profitability of doing business in Scotland is less than for England.”

So there. Or not. First off, I don’t know about you, but last time I went anywhere noticeably dispersed in Scotland I didn’t encounter a single major supermarket outlet whatsoever (check what Yell has to say about supermarkets on Arran fer instance). Rather, what I encountered were corner shops that already were charging plenty extra for basic goods.

Second, well lets go to some of Scotland’s more distant locales that aren’t so dispersed then, Inverness for example, the capital of the highlands or as it's also known “Tesco Town” i.e. a far north location with a ridiculous concentration of major supermarket outlets where logistical scale economies are already being achieved to the point where the notion that yer average Inverness punter’s weekly shop is being subsidised is a joke (alternatively and in the interests of fairness try Stonehaven instead give or take what you’d discover there are the joys of living somewhere where the only supermarket on offer is the Co-op what that means in terms of crap fruit and veg).

Dull facts mean I’m not too convinced by the “argument” being made allova sudden. But, what the hey, lets take them at their word regardless, except (a) if transport costs really are all that, then presumably this creates a greater incentive to source local produce i.e. taking away the supposed English food price subsidy could benefit Scottish food producers and/or (b) as supermarkets depend on price and convenience to out-compete smaller, local rivals, if price was less of an option, then Scottish independence could benefit local retailers. Oh and (c) so howcome a pint costs more in London, especially London City-bastard-Airport than anywhere in Scotland then eh? Eh?

Besides not being especially convinced by the anti-independence argument being made, what really struck me was the associated chat about the limited appeal of the SNP’s proposed competitive corporation tax rate; “the supermarket groups tell me that the Scottish government's promise to cut the headline rate of corporation tax by up to three percentage points would be of little benefit to them. The boss of one says the health increment on the rates currently costs them more than four times what that cut in corporation tax would shave off their tax bills….. The biggest Scottish supermarkets, those with a rateable value of more than £300,000, and which sell both cigarettes and alcohol, pay a 28% "health" increment on business rates - which costs them collectively around £30m a year.”

Now just chew on that for a second. And another. And then some more. Yup, that’s right, cutting corporation tax wouldn’t actually matter because these feckers already do so much to avoid it cutting it would be largely immaterial.

Now this strikes me as being what’s actually important here, which is as follows; Scotland already provides a practical example of how big, global PLCs can be more fairly taxed than is currently the case because it operates a tax that uses the rateable value of premises to exclusively target big retailers rather than whatever profits supermarket accountants claim they make in whatever country they happen to be operating in. And have any major supermarkets left Scotland as a result because they’re not subject to this tax in England? No, they haven’t and no they won’t either, because they, like KFC, amazon, google, Multinational-Tax-Dodging Incorporated etc.,  need boots on the ground to ensure they can actually reach consumers as this droog refers to here and here.

So really whether food would cost more in an independent Scotland is besides the point not least because the arguments presented as to why are pants and potentially favour independence. But, do existing Scottish tax arrangements – hit ‘em in their cost base regardless of the declared profits - provide a practical example of how to quickly and easily tax multinational PLCs more fairly without this having any adverse effects whatsoever let alone requiring any grand international agreements to be made that will never actually happen? You utterly betcha.

No wonder the article I’ve heavily quoted from referred to supermarkets being afraid of going on record about what they think, its just the reasons why appear a lot less to do with a supposed fear of Alex Salmond saying nasty things about them and a lot more to do with people actually having a  think about how they're currently taxed.

No comments:

Post a Comment