Developing a sense of common purpose is critical for nation-building
"Far from impeding prosperity, it is high-growth countries that tend to have a larger share of tax revenues in GDP... It can also increase economic flexibility by sharing the burden of economic transitions... Collecting broad-based taxes, such as income tax and value-added tax (VAT), is key to this endeavour...
"Creating a sense of common purpose will be key [to building a successful nation state] ... We would expect Scotland to retain the broad administrative and political institutions that are conducive to this, especially strong constraints on executive power and openly contested elections...
"To succeed as an independent fiscal state, Scotland would have to rely on its strong civic culture to bolster the piecemeal process of state capacity... In line with greater confidence in Holyrood versus Westminster, it is plausible that strong norms and values could bolster an independent Scotland’s fiscal capacity in the long run.
How Scotland handles debates about the design of tax systems would also be a new challenge for the political economy of Scotland, with the degree of progressivity in the tax system and the structure of business taxation having to be resolved.
This would be key if Scotland wished to evolve a different model for the role of the state, with more generous social provision. Whether it would be able to replicate the generous corporate tax policies that Ireland and Luxemburg have evolved, while aspiring to join the EU, is a further key issue.
It remains unclear whether the implications for tax policy will become central debating points in any referendum, should one transpire. How the fiscal capacity of the UK, as currently constituted, transfers tax powers to a newly independent Scotland would also be an important question. No successful state, large or small, can neglect the exigencies of taxation if it is to serve its citizens effectively."