Showing posts with label missing revenue. Show all posts
Showing posts with label missing revenue. Show all posts

Sunday, 24 May 2015

Sowing the Seeds

Although its importance can easily be over-estimated, it's clear that social media plays an increasingly prominent role in political debate.

Twitter has been embraced by many of our leading politicians (in Scotland at least). The obvious advantage of Twitter is that it disintermediates; messages are not parsed by a sometimes unhelpful media but instead pass uneditted from the keypad of the politician to the screen of the reader.

For those who are smart enough not to outsource their account management to a press officer, Twitter offers a wonderful opportunity to project their true personalities. Women in Scottish politics seem to be particularly adept at this.  During last year's Australian Open, our three most prominent female MSPs treated us to this rather marvellous exchange


Adding weight to the "female politicians are better at this than men" thesis is the recent arrival on Twitter of Johann Lamont (until recently leader of Scottish Labour's opposition). She has a fine line in self-deprecating wit, as she showed during last night's Eurovision
I don't know why this should be the case, but it's hard to imagine equivalent exchanges between prominent male politicians. More's the pity.

But of course it's not just about prominent figures taking the opportunity to demonstrate their character and humour. It's possible - in theory at least - to use social media as a way of engaging in substantive debate. It's true that Twitter's 140 character limit forces aphoristic brevity, but in the era of sound-bite politics and short attention spans that's arguably no bad thing. And of course for those keen to delve a little deeper both Twitter and Facebook can act as gateways through to more detailed expositions - the chances are you're reading this blog as the result of a Tweet or a Facebook posting.

The performance of politicians when it comes to using Twitter as a forum to engage (as opposed to project) is - in  my experience - patchy at best.  I've blogged before about the exchanges I've had with SNP MP's George Kerevan, Stewart Stevenson and Michelle Thomson. I'm maybe not best placed to judge, but I don't think any of their reputations were burnished by our interactions. The pattern is usually the same: they say something that's demonstrably untrue or at the very least misleading; I politely ask for clarification; they respond assuming they can bluff their way through; I demonstrate I know what I'm talking about; they go quiet. Of course Kerevan and Thomson were both elected to Westminster with landslide margins, so it's clear their interactions with me didn't cause them any lasting harm.

At least if politicans are on Twitter they can be swiftly and directly upbraided when they spout nonsense. In the past many of us have shouted at the television in frustration and achieved nothing more than startling our pets; now we can at least share our irritation with a wider audience.

Take this recent brief exchange with Angus MacNeil MP (after he attempted to misrepresent a piece of NIESR research).

He responded by blocking me immediately, which seemed a little harsh. But when I shared that fact it got widely retweeted.  As of today my Twitter analytics tells me the Tweet below has been viewed by over 70,000 people.
I'm sure Angus won't be losing any sleep over this, but it is at least more satisfying for me than an impotent rant at the TV. And my dog's slumber was undisturbed; this has to be seen as progress.

Aa an aside: Angus Armstrong (a Director of NIESR) did respond to him pointing out that the NIESR hadn't implied what Mr MacNeil suggested. I don't know if Angus blocked him or not.


So far so good. These examples all show how social media generally and Twitter specifically can, in a small way, add to the quality of political debate.

There's a darker side to all of this of course. I have been asked few times by journalists about the abuse I receive online.  My response is generally a shrug. What can sometimes seem like a lot of noise is usually no more than a handful of people. In the context of the volume of voices on Twitter it's frankly irrelevant and it's easy enough to block and move on.

But there is something about the burgeoning role of social media that bothers me far more than the trolls, cybernats and other online abusers: social media is an extremely powerful tool for spreading misinformation.

There has been plenty written about the role of social media in propogating conspiracy theories. Wikipedia suggests that between 6% and 20% of Americans and possibly 28% of russians believe the manned moon landings were fake.

The potential for ludicrous theories or beliefs to gain traction online has not gone unnoticed by the smarter political campaigners and, in my experience, the SNP have been particulary adept at exploiting this.

Let's take one simple example that my Twitter timeline is consistently plagued by: the suggestion that the official Governement Expenditure and Revenue Statistics (GERS) are totally flawed (and so can be safely ignored if they demonstrate what some of us would suggest are unfortunate truths).

The most common accusations are that they miss huge chunks of revenue because they fail to include export duty on whisky and VAT receipts that are recorded at company headquarters in London. There is no such thing as export Duty on Whisky and the VAT receipts in GERS are estimated, correctly, based on point of consumption. I've covered this in detail many times on this blog - the extract below is from my post on "How Scotland's Economy Contributes to the UK" if you need more convincing

The GERS figures are created by the Scottish Government and underpinned the economic case for Independence - so it is fair to assume that if there is any bias it would be to skew the picture in Scotland's favour.

 HMRC produce their own figures (Table 4 in this HMRC Document shows methodological differences between HMRC and the Scottish Government)  and pages 38 and 39 of GERS show that the differences between HMRC and GERS estimates are are in fact very small.

 GERS estimate Scottish Tax revenues in 2013-14 to be 0.36%(£181m) higher than HMRC. The likes of Business for Scotland and Wings Over Scotland have made startlingly misinformed statements about VAT and Alcohol Duty that have led some people to doubt the validity of these figures.

 If BfS and Wings were right it would be a terrifying indictment of the Scottish Government and the official Yes campaign's competence - but of course they are not right; the figures are sound. 

 References to VAT being "paid at companies' headquarters" and Scotland not getting attributed "Alcohol Duty at point of export" demonstrate a fundamental misunderstanding of how these taxes work and how they are attributed in GERS.  These are consumption taxes and GERS estimates Scotland's share of these based on consumption data.  There is no such thing as "Export Duty" on whisky (in fact you get Export Duty Relief); for the same reason we get to keep tobacco Duty despite not producing cigarettes.  A 2 minute search of the official GERS Method Statement is enough to dispel these myths.

But browse the comments section of my blog or engage in any GERS numbers based debate on Twitter and you'll see that these untruths are well established in the minds of many voters. How do they become so firmly rooted?

You won't (as far as I'm aware) hear any elected MSP suggesting the GERS figures are fundamentally flawed - they would look ridiculous if they did. But you don't have to look too far to see how this misinformation has been seeded online by the SNP's cheerleaders.

This post from the awful "Wings Over Scotland" is still available for all to see - amongst a lot of nonsense it includes the following paragraph
There are other ways in which Scottish revenues are invisible in the official statistics. Much of the alcohol duty paid by our whisky industry is not counted as revenue from Scotland. Alcohol produced in the UK which is exported abroad becomes subject to UK alcohol duty at the point of export, and a large proportion of Scotland’s multibillion whisky exports gets shipped out from ports in England. The UK Treasury counts the duty levied on this whisky as income from the tax region in which the port is situated
This is of course simply, demonstrably and unequivocally complete rubbish. Funnily enough the same paragraph appears in a paper from the similarly ludicrous Business for Scotland. They didn't even bother rewording it - it's a direct cut & paste job. That seems to be how the SNP mouthpieces work.

So we can see how these falsehoods (and many others) are shamelessly seeded by the SNP's influential social media taskforce.  Of course our social media savvy SNP MPs and MSPs do nothing to disabuse their followers of the resulting false perceptions.

This stuff takes root. That Wings Over Scotland post was made in November 2013 and is still consistently cited as "proof" that the GERS figures are wrong. Of course the beauty of a blog, of online materials generally, is that if errors are pointed out it's the work of moments to correct them.  So either the blog's author (the odious* "Reverend" Stuart Campbell) doesn't realise his mistake or he's happy to perpetuate what he knows to be an untruth.  There are plenty more examples I could cite; I'm pretty sure he knows precisely what he's doing.

This to me is far more concerning than people like me receiving a few snide, snarky and occasionally downright nasty tweets.



ADDENDUM

 Incredibly there has been a storm of people on Twitter (including the Rev himself) defending these ludicrous claims that he's published.

Firstly let's be absolutely clear: GERS does not miss out Scottish Revenues - the whole point of GERS is to hypothecate a stand-alone Scotland's finances and it's created by the Scottish Government and was the foundation of the White Paper.

On the specific excise duty point - the 2008 GERS incudes this helpful summary which I quote in its entirety here (highlighting mine obviously):
Value Added Tax ( VAT) and excise duties are the principal elements of indirect taxation ( i.e. taxes on products) in the UK.
VAT is charged on the final consumption of certain goods and services and is levied at 17.5% of the purchase price, though a reduced rate of 5% is levied on some items.
Alcohol excise duty is a flat-rate duty on alcoholic beverages while tobacco duty is a combination of flat rate duty and an ad valorem tax charged on cigarettes, cigars and loose tobacco. Any revisions to VAT and excise duties are announced during UK Budget and Pre-Budget ( PBR) reports.
Two alternative apportionment methodologies can be applied to VAT and excise duties.
  • Consumption based approach - apportioning VAT and excise duty to the region in which the good was consumed.
  • Production based approach - apportioning VAT and excise duty to the region in which the good was produced.
In GERS, VAT and excise duty estimates for Scotland are based on the consumption approach.
This is appropriate as the burden of the duty is borne by the final consumer rather than the producer. This is considered best practice as within a system of regional fiscal accounts, the VAT liability 'sticks' when the item is purchased by the final consumer. The location of production is of no relevance.
Tobacco and alcohol duties are only collected if the product is consumed in the UK. If the product is exported, the producer receives export relief. For example, while duty is levied on Scotch Whisky when it leaves a bonded warehouse, in reality it is only collected if the whisky is consumed in the UK. Consequently, the ultimate payer of the duty is the UK consumer of the product.
Therefore, GERS estimates duty collected from Scotch Whisky based upon the level of whisky consumption in Scotland, even though Scotch Whisky is only produced in Scotland. Similarly, the estimate of tobacco duty collected in Scotland is based upon the level of consumption of tobacco products in Scotland, even though most tobacco goods are produced outside Scotland.
So his article that talks about missing Scottish revenues because of excise duties levied at English ports is just wrong.

If in doubt, here's the Scotch Whisky Association on the topic



You might think the Reverend would have the sense to back down gracefully - lol.

This is how he's responded (do read through to the denouement)




The abuse aside*, it's frankly hilarious that he finishes by attempting to reinforce the belief he's actively propagated - namely that GERS misses a load of revenue that should rightfully be attributed to Scotland.

He plays semantics around "export duty" not being mentioned - I quoted him verbatim in my original post and my timeline is littered with people using the phrase "export duty" and linking back to his article as "proof".

In case anybody is won over by his "export duty wasn't mentioned point", this is the end of the Wings article that I was quoting from (if you can stomach reading the whole article it makes the same erroneous point about VAT reporting);
Billions of pounds of Scottish revenue is magicked away in the official statistics, and doesn’t count as Scottish revenue. It masquerades as revenue from other parts of the UK, most commonly as revenue from London. In total, the extra revenues which don’t currently figure in the GERS stats, but would accrue to an independent Scottish Treasury, would likely be larger than the entire annual income from the North Sea.
This article was published in November 2013 - at that time the most recent annual income from the North Sea was £9.7bn.

So Wings tells his followers that GERS is missing a figure that "would likely" be £10bn+.

He really should be on the phone to the person who takes responsibility for the GERS figures - the Scottish Government's Chief Statistician.

* for those who question my use of the term "odious" I refer you to the above and his timeline in general


ADDENDUM 2
While writing the above Addendum I emailed a highly respected industry expert  who - given the abuse I've been receiving - understandably wishes to remain anonymous.  On this one I'm afraid you'll have to take my word for ot that this chap knows his stuff. He confirms that my understanding is correct and offered the following simple rebuttal to the quoted extract from the Wings article;
"No alcohol duty is levied on Scotch Whisky exported from the UK to the EU or third countries, whether from Scottish ports or from ports elsewhere in the UK. UK alcohol duty (excise duty) is only levied on Scotch Whisky when released from bond for consumption in the UK. Under EU law, the rate of excise duty has to be consistent across the territory of a member state. If Scotland were an independent country, the rate of excise duty on Scotch Whisky would be set by a Scottish Government within the parameters for excise duty on alcoholic drinks set by the European Union.The excise duty revenue accruing to a Scottish exchequer would only be the amount raised on the release from bond of Scotch Whisky for consumption in Scotland." 

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