Flawed wisdom behind Nicola’s great tax grab
THERE is something more than a little unsavoury about those who are paid by the taxpayer telling those same taxpayers they have to pay more. But that is the situation we find ourselves in Scotland, with a First Minister who has spent almost the whole of her working life living off the taxpayer.
When she announced last week that she would not be passing on George Osborne’s tax cut for middle-income earners, Nicola Sturgeon completed the third side in what has become her own, vengeful, Nationalist tax trap.
She will now go into the election with three messages: if you have worked your way up the property ladder and have a decent family home in a nice area, you are going to have to pay more in council tax; if you want to sell that house and move somewhere else, perhaps of a similar size, perhaps somewhere bigger, you are going to have to pay more in stamp duty; and if you happen to have advanced in your career and now earn more than £43,000 – perhaps you are a teacher, a police officer, a plumber or an IT worker – you will pay more in income tax than if you lived elsewhere in the UK.
Not only will you have to pay at least £400 more every year than you should – and for some people that will be very hard to find – but you will be paying more than your counterparts in England.
It is not hard to envisage a situation where there are two people doing identical jobs for the same company on different sides of the Border, yet one takes home more than the other.
That is going to cause resentment: genuine, understandable resentment.
But there is another issue at stake here and it is one Miss Sturgeon doesn’t seem to understand: perception.
Scottish Conservative leader Ruth Davidson was right last week when she said she didn’t want to see a sign at the Border declaring: ‘Welcome to Scotland, the highest-taxed part of the UK.’
But that is exactly where we are heading. With higher council tax rates, steeper stamp duty charges and the most punitive income tax bills in the UK, Scotland will gain the totally justified reputation for being the highest taxed part of the country. This will echo, not just across the UK, but right around the world.
There is absolutely no doubt that companies will look at Scotland and think twice before locating here.
Firms already here will think about moving away. Far from attracting new businesses and entrepreneurs, Scotland will actively repel them.
But this is just the start of Miss Sturgeon’s money-grabbing, deluded lurch to the Left.
Mr Osborne announced plans last week to cut corporation tax by 3p in the pound.
This was exactly what Alex Salmond wanted to do when he was First Minister. Mr Salmond knew the effect such a cut would have. He knew that cutting business taxes would bring in more revenue than a higher tax, simply because more businesses would come to Scotland.
Just consider what happened when the Conservative government abolished the top 50p income tax rate in 2013. The tax take from the top 1 per cent of earners in the country actually went up, from 25 per cent of total income tax to 28 per cent.
This is what Miss Sturgeon does not understand. If you raise tax rates, you don’t always end up with more money. Indeed, the best way of raising more revenue is often to cut taxes, not raise them, because that increases the size of the tax base.
MR Salmond realised that – Miss Sturgeon does not. This was amply demonstrated when she ditched the plan to cut business taxes as soon as she took over. But there is a wider and potentially more significant political point here. Mr Salmond was very good at forging a grand coalition of interests underneath the SNP umbrella. Back in 2004, when he set about trying to rescue the then struggling SNP, the first thing he did was send two of his most business-friendly lieutenants, Andrew Wilson and Jim Mather, into every boardroom in Scotland.
They wooed the business community with promises of tax cuts and a pro-enterprise environ- ment – but that could never happen now, not under Miss Sturgeon. She has taken the SNP so far off to the Left that large swathes of the business community will never trust her or her party again – and the same goes for thousands of Scots who will be forced to pay more in a whole range of new tax rises while their counterparts in England watch from afar, unaffected.
Miss Sturgeon is much more principled and much more Leftwing than her predecessor – she is more Jeremy Corbyn with a yellow rosette than a Salmond clone. So, by embracing such overt ‘hammer the well-off’ policies, she is in danger of destroying that grand Nationalist coalition Mr Salmond spent so long putting together.
But perhaps we shouldn’t be too surprised. After all, of the nine members of the Scottish Cabinet, eight have no real experience of working in the private sector and not one has actually set up a business or done anything even remotely entrepreneurial in their lives.
What this means is that, from Miss Sturgeon down, we are being run by a group of people who are so used to just taking money from those who make it that they have forgotten – or perhaps never knew in the first place – what it takes to make it.