Stur­geon is the spi­der, the op­po­si­tion are flies – and tax plan is de­signed to trap them

The Scotsman - - Perspective - Brian Wil­son

An auc­tion seems to have de­vel­oped in Scot­tish pol­i­tics to de­ter­mine who will in­crease in­come tax by the high­est de­gree. This is puz­zling since, of all the reme­dies re­quired by the Scot­tish econ­omy, higher per­sonal tax­a­tion does not spring to mind.

I of­fer a cau­tion­ary tale. Frank Do­ran, my for­mer col­league who died last week, was elected in Aberdeen in 1987 and lost his seat five years later. (He sub­se­quently re­turned in 1997). Frank never doubted that his en­forced ab­sence was due pri­mar­ily to then Shadow Chan­cel­lor John Smith’s re­dis­tri­bu­tion­ist “al­ter­na­tive bud­get”. Frank knew how the wind was blow­ing when he vis­ited an oil plat­form and as­sured the work­ers no­body earn­ing be­low £21,000 (in 1992) would be af­fected. He was bluntly ad­vised they were all earn­ing above that, lived ac­cord­ingly, and did not fancy pay­ing more tax.

At least John had a mas­sive UK pot to re­dis­tribute. Hit­ting the bet­ter-off in the wal­let should have been a saleable pol­icy. The prob­lem was that not only those who were go­ing to be af­fected, but many who thought they might be one day, de­cided to err on the side of cau­tion, and voted ac­cord­ingly.

By con­trast, the strik­ing fea­ture of the Scot­tish tax base is its nar­row­ness. Two mil­lion adults pay no in­come tax. Only 20,000 Scots are in the top tax bracket, earn­ing more than £144,000, and they al­ready con­trib­ute 20 per cent of the in­come tax take. While many of the two mil­lion might cheer­fully see the 20,000 squeezed till the pips squeak, that would not solve the prob­lem.

In or­der to raise any sig­nif­i­cant sum, the Scot­tish Gov­ern­ment needs to im­pinge on the good­will of those who are earn­ing a bit more than av­er­age but would cer­tainly not con­sider them­selves rich. In­ci­den­tally, £21,000 in 1992 is worth £42,000 to­day, so that is an in­di­ca­tor of where voter re­sis­tance might be­gin, per­haps lower.

The Snp-run Scot­tish Gov­ern­ment has launched a con­sul­ta­tion around four op­tions which would bring in be­tween £83 mil­lion and £230m ex­tra. Other po­lit­i­cal par­ties are in­vited to con­trib­ute. A lang spune is ad­vis­able as con­firmed by last week’s First Min­is­ter’s Ques­tions when Jackie Bail­lie, for Labour, sought to probe the is­sue.

For her trou­ble, she was sub­jected to a dose of petty, par­ti­san snash, the de­liv­ery of which re­mains the First Min­is­ter’s un­doubted ta­lent. She and her col­leagues are not re­motely in­ter­ested in a “con­sul­ta­tion”. Rather, they are seek­ing po­lit­i­cal cover for what­ever they de­cide to do and I see no ob­vi­ous rea­son why this should be granted to them.

Holy­rood elec­tions are not due un­til 2021 and if, in the mean­time, the SNP and their lit­tle Green helpers want to in­crease in­come tax, they should be left to get on with it. The sen­si­ble po­si­tion for any other party is to call for a Com­pre­hen­sive Spend­ing Re­view rather than join­ing any rush to in­crease Scot­tish in­come tax.

Labour has par­tic­u­lar rea­son to ex­er­cise cau­tion. My strong sus­pi­cion is that if the SNP go ahead and in­crease in­come tax, there will be pre­cious lit­tle to show for it by 2021. The tax-pay­ing sec­tion of the elec­torate will rightly feel that it has been brow­beaten into pay­ing more for no very ob­vi­ous rea­son.

At that point, it should be the party of gov­ern­ment that takes the rap. But if Labour al­lows it­self to be ma­noeu­vred into a po­si­tion where its only an­swer is to say the tax take should be even higher, then they should not ex­pect the grat­i­tude of the peo­ple. My scep­ti­cism about higher Scot­tish tax­a­tion is not just on grounds of eco­nomic im­pact. I also ob­ject to the in­tel­lec­tual lazi­ness. Rais­ing more from tax in or­der to add to what the gov­ern­ment spends can only be jus­ti­fied after scru­tiny of ex­ist­ing bud­gets, down to mi­cro level. The chal­lenge of rad­i­cal pol­i­tics should be to do things fairly and ef­fec­tively, which is far from syn­ony­mous with sim­ply spend­ing more.

No mat­ter who was run­ning Holy­rood, a Com­pre­hen­sive Spend­ing Re­view would be es­sen­tial. De­vo­lu­tion has been op­er­at­ing for 20 years. The bud­get has in­creased dra­mat­i­cally – this year it will be £37 bil­lion. Hardly a day goes by without an­other ini­tia­tive with eye-catch­ing num­bers at­tached to it. Pol­i­tics should be the lan­guage of pri­or­i­ties – not of sim­ply tak­ing what al­ready ex­ists and adding on. If even the most rad­i­cal of the four op­tions was im­ple­mented, it would bring in well un­der one per cent of the cur­rent Scot­tish bud­get with no guar­an­tee of what that money would be spent on. We have £1,400-a-head higher spend­ing in Scot­land than the rest of the UK. Is an­other 50 quid, which is what the top-end tax op­tion equates to, go­ing to make any dif­fer­ence?

A re­tired head­mas­ter in Ed­in­burgh this week pointed out that, over the past five years, the city’s bud­get has been re­duced by £240 mil­lion with an­other £140 mil­lion cut in the pipe­line. That’s Ed­in­burgh alone. The at­tack on lo­cal gov­ern­ment has been wildly dis­pro­por­tion­ate to any­thing suf­fered by the Scot­tish Gov­ern­ment it­self, a re­flec­tion of Min­is­te­rial pri­or­i­ties which does not re­quire a tax in­crease to cor­rect. For a decade, the coun­cil tax freeze has brought the poor noth­ing other than re­duced ser­vices while cos­set­ing the bet­ter-off. How does this sit with a new or­tho­doxy that Scot­tish in­come tax must in­crease, without any guar­an­tee a penny of it will go to re­liev­ing the de­pri­va­tion which the same ge­niuses in St An­drew’s House in­flicted on coun­cil ser­vices?

Then there is the sheer opaque­ness of Scot­tish Gov­ern­ment spend­ing. I re­cently com­mented on a £500m Growth Fund which Stur­geon an­nounced a year ago with noth­ing so far hav­ing hap­pened. The news­pa­per cut­tings, if any­one both­ered to look, are lit­tered with th­ese neb­u­lous an­nounce­ments.

Is this how ex­tra rev­enue would be spent? Shouldn’t some­one find out be­fore en­dors­ing any tax in­crease? Op­po­si­tion par­ties at Holy­rood should spend the next few years com­ing up with cre­ative poli­cies that do not rely on the as­sump­tion of spend­ing more.

Mean­while they should stay well clear of the spi­der-fly re­la­tion­ship in­her­ent in a tax-rais­ing auc­tion while re­learn­ing “the lan­guage of pri­or­i­ties”.


0 John Smith planned to in­crease taxes and the vot­ers didn’t buy it, says Brian Wil­son

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