The SNP lurches left on tax

The SNP lurches left on tax

by Murdo Fraser
article from Friday 22, September, 2017

ONLY LAST YEAR it was quite clear where the SNP stood on Income Tax increases. The SNP manifesto for the Holyrood elections ruled out an increase in the basic rate.

Challenged by Scottish Labour at First Minister’s Questions on the 11th February 2016 to raise the basic rate by 1p, Nicola Sturgeon accused them of “perpetrating a con-trick on the lowest-paid workers in our society”. The day before, her Deputy John Swinney told the Scottish Parliament, “This is a tax change that would have a detrimental effect on the incomes of low-income households”.

It seems that a year is a long time in politics. Announcing her Programme for Government three weeks ago, the First Minister told opposition parties that she wanted to have a “conversation” around tax, clearly indicating that the SNP stance was about to shift.

The "conversation" continued on Wednesday in the Scottish Parliament Chamber, with a Labour Party debate on Income Tax. Speaking on behalf of the Scottish Government, the Finance Secretary Derek Mackay was very coy about where his party stood. Despite being challenged again and again to tell the Chamber exactly what he and his colleagues had in mind for tax, he refused to give out any detail.

What the Finance Secretary did say, however, was that the SNP would not be “taking a stand” on the Labour Motion calling for an increase in income tax. SNP members did, however, vote down a Conservative amendment in my name opposing any increase in the basic rate.

The SNP may say that it hasn’t yet made up its mind on taxation, but it was quite happy to see the Parliament vote though a Motion calling for tax rises, while at the same time rejecting a statement opposing them. “Not taking a stand” on taxation seems to be SNP code for “We’re coming for your wallets”.

It is hard to see how tax rises can be justified at this time, particularly when they might hit those from lower income groups. We heard a lot in Wednesday’s debate from both Labour and the SNP about “Tory austerity”. The fact is, however, that the Scottish Budget in overall terms has not been cut since its previous high point of 2010, as the Fraser of Allander Institute has made clear.

The Scottish Government’s discretionary spend may be down on its previous high point of 2010, but compared to 2007, the year the SNP came to power, there has been no real terms cut in discretionary spending over that ten-year period. And 2007, after ten years of Gordon Brown as Chancellor, hardly represents a high point of austerity.

The annual GERS figures published last month made clear that the level of public spending in Scotland is in excess off £1,400 per head of population higher than the UK average. This was backed up on Monday by analysis from Professor Jim Gallagher of Nuffield College, which stated that in some cases Scottish spending on public services is 25 per cent higher than that in England. 

The reality is that we are spending much more on our public services already than the UK average, but in too many cases we have poorer outcomes. The answer, surely, is not to be injecting yet more money, but is to promote public sector reform to ensure we are getting a bigger bang for our buck.

In response to the Programme for Government, business organisations like the Scottish Chambers of Commerce and the Scottish Retail Consortium expressed grave concern about the impact that further tax changes might have on consumer spending, and thus economic growth. So the Scottish Conservatives are not alone in raising these concerns.

And while the rhetoric of the SNP might now be all around the need to increase taxes, in other areas they are going in the opposite direction. When announcing the extension of various Business Rates exemptions last week, the Finance Secretary specifically accepted the argument that these would help businesses, and assist economic growth. For example it is still SNP policy to reduce Air Departure Tax by 50 per cent, on the basis that this will deliver economic growth. So, we have a party that one day is arguing for tax rises, but the next may make the case for tax cuts.

I welcome the fact that we are opening up a new debate around levels of taxation. The Scottish Conservatives have a clear position on this: we want competitive taxes in Scotland to help grow our economy, to increase our tax revenues, and to make Scotland an attractive place to live, work and do business.

Increasingly it seems we are facing a left-of-centre consensus, with SNP, Labour, Greens and Liberal Democrats all lining up to increase the tax burden on ordinary hard-working Scottish families. If only the Scottish Conservatives are prepared to stand up for Scottish taxpayers, then we will do so proudly, and confident that we have the people on our side.

Murdo Fraser has been a Conservative MSP for Mid Scotland and Fife since 2001 and is the party's Shadow Finance Secretary.

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