‘Tax gap’ policy will hit workers

This week we return to Holyrood where the top item on the agenda is the SNP’s draft budget for 2019-20. Before considering the decisions made by the Scottish Finance Secretary in the draft Scottish budget, we must remember the important decisions made by Chancellor Phillip Hammond in October’s UK Budget.

In that Budget Mr Hammond decided that, after a decade of fiscal restraint following the financial crisis and Labour’s disastrous handling of the nation’s finances, now was the time to inject funding into the economy and wider public services. He was able to do that due to the strong economic record of the UK Conservative Government which has led to record low unemployment and strong economic growth in challenging times.

The Chancellor decided to increase spending on public services to record levels and delivered almost £1 billion in additional funding to the SNP Government to spend on public services in Scotland.

Derek Mackay therefore had a huge opportunity to go for growth and invest in economic development, introduce measures to rejuvenate Scotland’s high streets and lower the increasing tax burden on families and businesses across the country. The great pity is that this chance was wasted by an SNP Government who have again decided to hit hard-working families in the pocket - rather than growing the economy.

The Finance Secretary has decided to increase the‘Tax Gap’between Scotland and the rest of the UK, resulting in a significant tax differential between Scotland and the rest of the United Kingdom.

This means that those earning between £43,430 and £50,000 will pay a marginal rate of tax of 53 per cent. Among the worker trapped will be police sergeants who will pay £700 more, senior nurses who will pay £1350 more and principal teachers who will now pay £1500 more than their equivalents in the rest of the UK.

These decisions will have a very real impact on people across Mid-Scotland and Fife and in the real world will mean that a family of four with one earner bringing home £50,000 will now have £1544 less to spend a year than somebody living elsewhere in the United Kingdom.

The real damage that these policies will do to Scotland’s economy is that the increasing tax gap will lead to families and businesses deciding to leave Scotland or set up elsewhere in the UK. Not increasing the‘Tax Gap’ was the main ask of virtually all of Scotland’s business organisations.

Businesses in Edinburgh, Glasgow, Aberdeen and here in Stirling are hoping to attract talent from places such as Birmingham, Bristol, Leeds and London. To grow Scotland’s economy and increase funding to vital public services, we need to attract high growth businesses to Scotland in the fast growing sectors including digital, technology and life sciences. This involves attracting high-skilled workers to Scotland. Making Scotland the highest taxed part of the UK is not going to achieve this.

Furthermore, figures from the Scottish Fiscal Commission show that they have revised down their estimates for Scottish income tax revenues from £12.5 billion to £11.6 billion. Almost a billion pounds which could have gone on public services.

This is the cost of failing to grow the economy and the well paid jobs that boost government funds.

The Scottish budget also revealed that once again it will be local councils who will bear the brunt for the failures of this SNP Government.

Figures published by the independent Scottish Parliament Information Centre show that, excluding ring-fenced funding, Stirling Council face a real terms three per cent reduction in its block grant from Holyrood.

This funding settlement from the SNP will mean that local services across Stirling are going to suffer badly.

The next few weeks will show whether the SNP council in Stirling is capable of standing up for Stirling or whether they will just sit back, accept funding reductions and take orders from Nicola Sturgeon.

I fully expect the latter.