Thursday, 29 March 2007

Double taxation treaties

From the Herald forum (link):
Niall,

I am wondering what assumptions you may have made about the nature of any double taxation treaties negotiated between a future Scottish state and other countries.

Regards,
AM
Another poster followed up with specific detail:
"...take our big two banks. Most of their income is made outside Scotland despite having (even bogus) H.Q.s in Edinburgh. Have you repatriated their corporation tax as a whole or apportioned it on the basis you describe? This would apply to our big insurers, indeed to every company trading beyond our boundaries perhaps even down to our Tunnock’s Carmel Wafers.

You see, your figures show a total Corporation Tax (incl basic North Sea but not North Sea SCT) payment for the U.K. of £33,641 [million] and Scotland’s share of that is shown as £7,367 [million] or almost 22% (if you add in SCT that jumps to 24%)."
This was Niall's reply:
[I] admit that in an Independent Scotland a proportion of these Taxes would be subject to double taxation relief and the the gross receipts would be reduced by some 55%.
In other words, Scotland's share would actually be nowhere near the 22% used in The Great Deception.

Tuesday, 27 March 2007

Percentage allocation of UK oil to an independent Scotland

The Great Deception says:
When the Scottish Parliament was established, the UK Government annexed 6000 square miles of Scottish Waters rich in Oil, Gas and Fish and transferred them to English jurisdiction.In these cases, I have re-allocated this areas Tax revenues to the Scottish Tax Revenues account under the original international boundary.
What original international boundary, one might ask? There can't have been an international boundary, in the accepted sense of the phrase, since before the 1707 Act of Union. The much-misquoted Continental Shelf (Jurisdiction) Order 1968 (link) only defined a Scottish area for purposes of application of Scots Law at sea. It certainly did not establish an international boundary.

The SNP's Mike Weir, MP for Angus has said:
The fishing boundary between Scotland and England has been recognised for hundreds of years. This move showed up Labour's contempt for our fishing industry.
This is entirely incorrect, as explained by Fisheries Minister Lord Sewel in a 1999 letter (link):
Much has been made about 6000 square miles of fishing grounds being seized. But the reality of the situation is that 140,000 square miles of British Fishery Limits has been transferred from the UK Government to the Scottish Parliament. We must not lose sight of this.

The boundary has been set by drawing a median line. This follows the accepted convention on such matters. Any point on the boundary line is of equal distance to the mainland of Scotland and of England. In other words every inch of the 6000 square miles is closer to England than to Scotland.

There has been no transfer of "Scottish fishing waters" to England. In fact, this Order allows the transfer of responsibility for regulating sea fisheries from the UK Parliament to the Scottish Parliament - not in the other direction. The rights of Scottish fishermen to fish throughout British fishery limits are unaffected by the Order.
The following is from Ross Finnie, Minister of Environment and Rural Development speaking in the Scottish Parliament on 3rd June 1999 (link):
The most important point is that it is also wrong to claim that a legally enforceable boundary line has been shifted. This is the first time that a fisheries boundary has been fixed in law. Before devolution, there were no Scottish fishing waters. There were only British fishing limits. The so-called existing line is simply part of an administrative arrangement within a UK-wide management regime. The boundary lines in the order are being drawn in accordance with international convention on such matters and-as members who have studied this matter will be aware-have involved the use of median lines.
The method of using median lines is indeed the established UN convention; see Part 2, Article 15. So, the upshot of this is that while The Great Deception uses 95% as the percentage of UK oil production that would be allocated to an independent Scotland, that figure is based on wishful thinking about where the international maritime boundary would in fact lie. A truer proportion would therefore be about 90%.

The monetary significance of this error would be in the amount of 5% of £4.985 billion, which is approximately £250 million per annum.

Monday, 26 March 2007

Hydrocarbon oils (fuel excise duties)

This blog has been set up to examine the conclusions of Niall Aslen's article The Great Deception (link).

This is the first of a number of analyses of Mr Aslen's figures and methods that I will publish here, as my time permits.

GERS 2005 used 5.6% (£1.313bn) as the Scotland:UK ratio for fuel excise duties. The SNP used 9% (£2.098bn) in “Scotland in Surplus”.

Mr Aslen used a massive 20.8% (£4.839bn) in The Great Deception but apart from referring to “the dominant position of the Grangemouth Refinery in the UK” and saying that he had “calculated the fuel duty from the production figures” he did not provide any further justification.

I also calculated the fuel duty from the production figures, but the following suggests that around only 4.53% (£1.057bn) of the total UK fuel excise duty comes from Grangemouth, Scotland's sole fuel refinery. This is £3.782bn below Mr Aslen's estimate.

FUEL TYPE PROPORTION OF OUTPUT DAILY OUTPUT (litres) 2004 EXCISE DUTY (£/l) DAILY EXCISE DUTY (£) ANNUAL EXCISE DUTY (£)
Petrol 22% 2,090,000 0.5170 1,080,530 394,393,450
Diesel 24% 2,280,000 0.4852 1,106,256 403,783,440
Kerosene & jet fuel 13% 1,235,000 0.2895 357,533 130,499,363
Gas oil 8% 760,000 0.0664 50,464 18,419,360
Fuel oil 15% 1,425,000 0.0624 88,920 32,455,800
LPG/petrochemical feedstocks 12% 1,140,000 0.1303 148,542 54,217,830
Fuel gas/other 6% 570,000 0.1110 63,270 23,093,550








GRANGEMOUTH TOTAL (£) 1,056,862,793


UK TOTAL (£) 23,314,000,000


GRANGEMOUTH AS % OF UK
4.53%



Proportion of output data:
http://www.ukpia.com/industry_information/refining_uk_refineries/refineries/ineos_grangemouth_refinery.aspx

Hydrocarbon duty rates 2004-05: (some assumptions on fuel type breakdown were required - please critique)
http://customs.hmrc.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_PROD_009002

Total daily Grangemouth output is "over 9 million litres". I used 9.5m.
http://www.innovene.com/genericarticle.do-categoryId=9002816&contentId=7005620.htm