‘Labour is willing to ask the wealthiest few to pay more to benefit the many’

Richard Leonard’s proposal to raise nearly £1bn in revenue gives the electorate a real choice

Scottish Parliament, we saw it as a bulwark against Tory austerity, but in recent years it has simply been a conveyor belt for cuts. That needs to end.

“Labour is willing to ask the wealthiest few to pay more to benefit the many and redistribute real economic power to local communities.

“The question now for other parties is do they agree with us?”

The income tax plan matches the Scottish Government’s starter rate of 19p, but places the income threshold for a 45p rate at just over £60,000 and introduces a new 50p top rate for those earning over £100,000.

Under the government’s draft budget, a 46p rate only kicks in for earnings over £150,000.

Ministers said their income tax policy is expected to raise an additional £164m.

Labour quoted analysis from the Scottish Parliament Information Centre (SPICE) estimating their plans would raise an extra £540m.

Labour also wants to give councils the power to introduce a tourist tax on hotel stays, currently being consid- ered in Edinburgh, and a land value tax on economically inactive land. The party also proposes a social responsibility levy for licensed premises and the full use of non-domestic rates income.

These measures would raise a further £422m, meaning Labour’s plans would raise an extra £960m.

The bulk of the extra funding – about £545m – would go to local councils to boost cash-strapped frontline services like social care and ensure council staff do not miss out on the end to the public sector pay cap.

More than a quarter of a million pounds would be allocated to fund a £5 child benefit top-up, with £100m of extra NHS funding and a fully-funded public sector pay increase.

But Mr Mackay insisted the proposals were “riddled with factual blunders”.

He added: “Not only would their plans raise far less than they claim, even where they will raise some revenue, for some of their suggestions that money won’t be available for years.

“That’s not much use to hardpressed families looking for a tax cut now or public sector workers hoping for a pay rise in April.

“Critically, Labour’s income tax plans clearly do not take account of behavioural change, which, given the sheer number of people who would be affected, would run into tens of millions of pounds.”

The Finance Secretary added the tourist tax and land value tax proposals would not raise “a single penny next year” because both required new laws to be passed at Holyrood. The land value tax would also require a Scotland-wide valuation to be carried out.

Conservative finance spokesman Murdo Fraser added: “Like the SNP and the Greens, it seems Labour’s only idea for generating more cash for public services is hammering hard workers.”

Greens co-convener Patrick Harvie said: “The SNP now have a wide range of options for going beyond their own tax plans – some from the Greens and some from Labour.

“If they intend to raise the revenue needed to protect local services, they’ll need to accept at least some of what the opposition parties have proposed.”

The cry of “voting doesn’t change anything, politicians are all the same” has long been a blight on democracy. But, after the launch of Labour’s alternative budget proposals, noone can say that is true in Scotland.

Richard Leonard’s election as party leader was expected to bring a return to tax-and-spend politics but, with proposals to raise nearly £1 billion of extra revenue, he has clearly decided to demonstrate this in dramatic fashion.

As the SNP has proposed more modest increases, the Nationalists will no longer be able to level the charge at Labour that they are nothing more than “Red Tories”, a label that seemed to gain traction among traditional Labour supporters in recent years. The decision also means the Scottish Conservatives will be even more attractive to voters whose primary motivation is low taxation.

Since the 1980s, an orthodoxy has emerged that raising income tax is akin to political suicide, but this is now being challenged – tentatively by the SNP and with gusto by Labour. Leonard will be hoping that out-flanking the SNP on the left will help win back those lost supporters.

There is a theory prevalent in SNP circles that Scotland has reached “Peak Tory” and that their only real threat is from Labour. But Ruth Davidson, who has made clear her ambition to occupy Bute House despite suggestions she could be a serious contender for Downing Street, will surely be delighted at the chance to hammer the two other main parties on tax.

The Labour wipeout and SNP surge in the 2015 general election, which saw the former lose 40 seats and the latter gain 50, showed Scottish voters are capable of making sudden, seismic shifts. Davidson may now be dreaming of the 1955 general election when 51 per cent of Scots voted Conservative.

The next Scottish Parliament election is not until 2021 so Labour’s current budget proposals are unlikely to see the light of day. But, if Labour was swept to power on a similar platform, first minister Richard Leonard might find himself with a problem. For experts have warned the Scottish Government that trying to raise taxes higher than it currently proposes would actually lead to lower revenues as wealthier people re-arrange their finances.

If those experts are right, Labour’s plans might result in higher taxes in Scotland – for those failing to employ clever accountants – and worse public services.