MacKay’s smoke and mirrors budget masks SNP economic failure

MacKay’s smoke and mirrors budget masks SNP economic failure

by Murdo Fraser
article from Saturday 16, December, 2017

IT WAS ALMOST as if Derek MacKay had been taking lessons from George Osborne.  The former Conservative Chancellor had a particular approach to Budget statements – a summary of economic data, a plethora of spending announcements, and a crowd-pleasing rabbit from the hat to finish.

It was only later – hours, sometimes days – that things would start to unravel. Remember the short-lived pasty tax?  Once the true consequences became clear, that particular proposal was quickly withdrawn. And it wasn’t the only one. In Budgets, the devil is in the detail – detail that often isn’t available when the Budget speeches are made.

And so it was with Derek MacKay’s announcement this week.  The plans to increase income tax for above-average earners – breaking a key SNP manifesto pledge – were widely expected, but less so was the cut in income tax for the less well paid.  It was greeted rapturously by SNP backbenchers.

It was only later that the full facts emerged.  For this 'generous' tax cut for lower earners amounts to a staggering £20 a year – just 38p a week, not enough even to buy a postage stamp.  Fortunately the same earners will – at the same time – see a further £70 cut thanks to a Conservative Government at Westminster raising the personal allowance. 

Not that you would read it in much of the commentary, but here we have a Conservative Government delivering three-and-a-half times the benefit to the lower paid than is being granted by the SNP at Holyrood. 

But perhaps the greatest shock from Thursday’s announcements came in the economic and financial projections from the Scottish Fiscal Commission. The already stuttering Scottish economy is projected to grow at only half the rate of the UK as a whole over the next four years. This will have devastating consequences for Scottish public finances.

As a result, compared to earlier this year, Scotland is now expected to raise £2.1 billion less than projected in tax revenue. Next year alone, the lost revenue due to lower growth is expected to be £205m compared to projections earlier this year – more than the £167m that Ministers are to take from the pockets of low, middle and high earners.

So we will have £2 billion less going to schools and hospitals because the SNP is failing to match levels of growth we are seeing elsewhere in the UK. The SNP’s answer is to introduce a new Nat Tax - but these figures show if we had higher growth, there would be no need to do so.

The SNP’s Nat Tax isn’t just a broken promise, it’s bad economics.  Hanging a sign at the Border saying ‘higher taxes here’ will drive away jobs and leave Scotland further behind other parts of the UK, as every business organisation in Scotland has made clear.

We know that, despite the SNP’s bluster, Nicola Sturgeon broke her promise on tax this week. She said she wouldn’t increase taxes on basic rate taxpayers, but that’s exactly what she’s done. 

It is time she apologised for misleading voters, and instead focussed her Government on delivering the growth we need to support our vital public services. That way we can avoid more unnecessary tax rises giving us a reputation as the highest-taxed part of the United Kingdom.

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