Owen Thompson is correct says reader

Monday December 2nd 2019

Owen-Thompson-SNP-Midlothian

Owen Thompson, SNP candidate speaking at the Midlothian Hustings. Photography by Lee Live: Photographer

Letter to the editor from reader Tim Rideout

Sir,

Nial Stewart is wrong (letter 30th November 2019) and Owen Thompson is correct. The Scottish Government does receive a fraction of the tax collected in Scotland. To be specific from the 2019 GERS Guesstimates then Scottish tax revenue was estimated at £62.7 billion. The Scottish Government budget, including local authorities, was some £43.2 billion, which means that Holyrood got back some 68.9% of what was collected in Scotland.

Whether what Westminster claims to spend on our behalf is really to our benefit is of course a good question. How much benefit do we get from Foreign Office spending when they decline to assist our First Minister on overseas visits? Crossrail, restoration of the House of Parliament and Buck House, HS2, etc? Billions on Trident and various military gambits, interest on the debts run up by the UK when Scotland over the last 30 years hasn’t had any debts?

More fundamentally, the assumption underlying Nial’s letter is that a state deficit is bad. This is actually wrong as the state is the issuer of the money supply and for us as the citizens to actually have any money at all requires that the state runs a deficit. It is double entry accounting so a state deficit is ipso facto a private sector surplus (surely good – who wants a private sector deficit?). In normal circumstances, unless there is an inflation problem and the economy is over-heating, then the state can and SHOULD run a deficit. It should run whatever deficit is necessary to achieve full employment. The cycle of money is that the state creates it by spending, it circulates around the economy and the state takes it back and destroys it via tax. The entire concept of ‘tax payers money’ is a right wing re-framing exercise from the 1980s designed to privatise ‘public funds’ and shrink the state to suit a neo-liberal right wing agenda.

For more information you can refer to reservebank.scot.

Yours sincerely,

Tim Rideout
Eskbank

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