A tax on aspiration

One of the consequences of devolution was to give greater autonomy to Scotland to set its own income taxes. For years, successive Labour/lib Dem governments at Holyrood resisted the option to adjust rates up or down by 3p in the pound; but further powers passed control to the now Snp-run administration in Edinburgh.

Scots voters discovered the implications of that move yesterday when the SNP unveiled a budget that creates a new tax band of 21p on earnings between £24,000 and £44,273, and increases the higher and top rate of income tax to 41p and 46p respectively. The basic rate of tax is frozen at 20p and a new “starter rate” of 19p will apply for low earners. This makes five income tax bands in Scotland, compared to three in the rest of the country and everyone earning more than £24,000 will pay a higher rate than those south of the border.

The new regime was justified by Derek Mackay, the finance secretary, on the grounds that only three in 10 taxpayers would pay more as a result. But by hitting middle earners, this is a tax on aspiration. It is characteristic of SNP thinking that people who do well are to be pursued for more, rather than their enterprise and success encouraged. The reason is as much political as ideological. After obliterating Labour in the 2015 general election and winning power at Holyrood, the SNP fear a Corbyn-led party promising even higher taxes on the rich and more public spending will win back support in Glasgow and the west of Scotland. While the two Left-wing parties slug it out, the opportunities for the Conservatives to build on their recent success under Ruth Davidson become greater still.