LOWER TAXES FOR SCOTLAND?…HOW VERY DARE YOU!

BILL JAMIESON

Swoon! Pick me off the floor: the Independent Tax Commission commissioned by Ruth Davidson and published last week has had a generally warm and supportive reaction, Labour’s Jackie Baillie excepting. But even the Left leaning IPPR posted a critique that was polite.

Can this be the Scotland we know – quick to demand ever more spending and barely pausing to ponder the effects of higher tax?
The very same. Might a deeply entrenched mind-set be changing?

I declare an interest: I was a member of the commission which worked on the 50-page report. Its work was enhanced by the inclusion of members who were not Conservatives or indeed conservative-inclined, excellent chairing by Sir Iain Macmillan, and independent experts and scrutineers to help ensure the report was as robustly argued and fair-minded as possible.

Proposals included a new “tax band for aspiration” between the 20 per cent and 40 per cent bands to boost growth; a freeze in business rates to help enterprise; no increase in the top rate of income tax and a reformed Council Tax: altogether mild and not afraid to be progressive.

Unfortunately, it’s not the fair-minded media response that will determine its fate. Many excellent reports have been sent to St Andrews House over the years – the Christie Commission and the 2010 Crawford Beveridge Independent Budget Review, which set out proposals for spending reduction and reform. Commentators applauded.

But the tax report – and its proposals – are set to join others in the dusty, cob-webbed vaults of St Andrews House. A quiet service, respectful eulogy and dignified burial is perhaps the best we can expect.

From the Right, Brian Monteith raised a cheer while spluttering at the Commission’s use of the “weasel word” progressive. But he fairly pointed out that such is the state of received wisdom in Scotland there is a very long distance to travel before a radical tax cutting programme stood a chance of support.

However, such is the revenue reliance already on the top rate of taxpayers – representing just 0.7 per cent of the taxpayer base but contributing 13.9 per cent of all tax revenue in Scotland – that extra charges here as proposed by Labour’s Kezia Dugdale would be more likely to result in lower revenue than an increase.

And the report itself, calling for a halt to the relentless rise in the revenue from business rates and a new configuration for Air Passenger Duty, marks a stand against the presumption that Holyrood’s new tax powers are a carte blanche for tax rises. As such it may work to encourage Tories who have voted tactically for the SNP to return.

Bear in mind also that jacking up taxes risks putting Scotland’s economy at a disadvantage. Growth slackened to just 0.1 per cent in the third quarter – well below the equivalent rate for the UK.

These are critical issues that must be faced – yet there is as yet little sign that Labour and SNP campaigns in May will acknowledge constraints that might inhibit their spending promises.

But there is a cost to turning a blind eye on the assumption that more money will always be forthcoming from the UK Exchequer. In the words of the Commission’s chairman Sir Iain Macmillan: “The Barnett escape hatch is about to be slammed shut.”

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  Comments: 1


  1. Bill , keep pushing the tax reform aggenda, common sense will eventually prevail. The recent stamp duty increases in Scotland being one that will take in much less and will have to be reformed .
    Prof Laffer was right on the money every time!!
    Scotland should be actively encouraging people with money to settle here / base their businesses/ new enterprises not chasing them away!!

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