NICOLA’S INCOME TAX STING IN THE TAIL: DIDN’T I TELL YOU!

KEN HOUSTON

My reference in last week’s Scot-Buzz to the likely response by our SNP government to George Osborne’s announcement on higher-rate income tax turned out to be depressingly prescient.

Just a few hours after Scotland’s premier business website had hit the nation’s e-mail inboxes last Tuesday morning, the First Minister gave public confirmation that her government would not be following Mr Osborne in raising the sum at which higher rate tax starts to be paid from £43,000 to £45,000 per annum when the appropriate powers become the responsibility of Holyrood next year.

Consequently, it also seems reasonable to presume that neither will the Scottish government join Mr Osborne in attempting to raise the threshold to £50,000 by 2020 – in which case, someone working for Virgin Money in Edinburgh and earning £50,000 per annum will be approximately £1,200, net, a year worse off than an equivalent earner in the company’s office in Newcastle upon Tyne 120 miles down the road.

At the same time Ms Sturgeon said that her government would, for the time being, keep the top rate of tax at its current level of 45pc for earnings over £150,000 per annum.

However this only happened because of realpolitik; if she thought it possible to raise the top rate and get away with it then I have no doubt she would have done so and top-earning Scots would be facing paying some tax at 50pc or perhaps even more.

No doubt our government ministers see themselves as latter-day Robin MacHoods who, contrary to Mr Osborne, are taking from the rich and giving to the poor. The justification will be that the money is better spent on improving life for the vast majority of ordinary Scots rather than putting more cash into the pockets of a relatively ‘better-off’ few.

But will the result really be less potholes on our roads or shorter hospital waiting times?

Let’s hope these tartan Robin Hoods don’t turn out to be just plain robbin’ hoods with the money spent on shoring up the Scottish quangocracy, on more obscene pay-offs for senior public servants and on pet political projects – such as the £12 million (over the last four years) devoted to “tackling sectarianism”, a problem which of course has nothing, absolutely nothing, to do with apartheid in the State education system which separates schoolchildren, on the grounds of religion, from the age of five up to at least 16.

There is, of course, more than an element of truth in the claim that George Osborne’s actions were blatantly political and aimed at his progression to the role of Prime Minister and a Tory victory at the 2020 General Election.

But only to a certain extent because Mr Osborne was perfectly correct to say that fiscal drag had driven, into the higher-rate, “many ordinary employees for whom it was never intended”.

Given the SNP stance there will be some relief that taxation of investment income is not being devolved to Holyrood because just as they declined to follow Westminster’s lead on higher-rate income tax, it is unlikely the Scottish government, had it the power, would have done the same in cutting capital gains tax.

The current Caledonian political establishment (which is not confined to the SNP) no doubt sees capital gains tax as something that applies only to wealthy adult brats, born with silver spoons, who have never done a decent days work in their lives; or ruthless hedge fund managers who put profit before people’s jobs.

In reality, investment income is being relied upon by more and more ordinary Scots in later life just to keep their heads above water financially.

Thanks to ‘quantitative easing’ (a euphemism for printing money), savings have been losing their value, leading many to put their cash reserves into the stock market – despite its attendant risk to capital – in the hope of obtaining the sort of modest returns (e.g. 5pc) that just a few years ago one could reasonably expect from a risk-free savings account.

This connection between the SNP government and CGT is, of course, supposition on my part but it seems fair to conclude that reducing tax on private investment income would not be one of its priorities, which to some extent leads on to the difficulty in securing a majority for ‘Yes’ in any future independence referendum.

It has become perfectly clear that the SNP perceives its client base to be welfare claimants, the low paid and anyone employed in the public sector (not only directly but indirectly through charities and even some companies wholly or mostly dependent on government business for their existence).

This leaves, out in the cold, a minority which one might encapsulate as ‘the thinking No voter’ who perceives independence (at least under the current policies of the SNP) to be contrary to business or personal and family interests. But this minority is large enough, and stubborn enough, to tip the balance in any referendum in favour of remaining part of the UK, as happened in September 2014.

Several months ago Ms Sturgeon declared that she wanted to “engage in dialogue” with ‘No’ voters in the hope of eventually winning them round to supporting independence.

A noble aspiration, Nicola, but remember it is deeds, not words, these people want. Follow that maxim and ‘the dream’ might actually one day become reality.

 

OUR GRANDMOTHERS WERE PROFESSORS OF “REAL LIFE”

As if employers have not had enough problems adjusting to the new regime of ‘shared paternity leave’ in the workplace, there comes the threat of even more associated expense and hassle: the government is to investigate the possibility of allowing this form of official absence to be extended to include grandparents.

So cue for BBC Radio Scotland to conduct an interview with one Lynn Jamieson (absolutely no relation – co-ed), described as ‘professor of sociology of families and relationships’ at the University of Edinburgh, who in typically serious academic tones informed us that the burden of child-rearing was increasingly being taken on by grandparents.

Really? In a society in which two working-parent households are common and professional childcare is hugely-expensive, it’s amazing that listeners were not aware of this already.

For a brief moment I considered the reaction, were she alive today, of my own gran who back in 1909, at the age of 13, left school without academic qualifications to start work in a laundry.

It would probably have been something along the lines of: “Do you really need to be a professor nowadays to tell folk the price of fish?”

Twitter: @PropPRMan

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