Political parties set for taxing times ahead

Orbit Communications - Alex Orr 01
Managing Director, Alex Orr, @Alex_M_Orr

Having taken some time to fully digest the Scottish Government’s Programme for Government, which outlines the 16 Bills that will be taken forward over the coming year it is clear that while grandiose in its ambitions, some measures in the legislative programme are not quite as radical as first appears.

Some of the aims that have won praise are rather vague in their aspirations. There is a promise to “fund research into the concept and feasibility of a Citizen’s Income”, or Universal Basic Income as it is more normally called.

Green groups called this the ‘greenest’ programme ever, welcoming the pledge to phase out petrol and diesel cars and vans by 2032. The Scottish Government however doesn’t actually have the power to ban petrol and diesel. A promise was also made to “promote” the use of ultra-low emission vehicles, with a ‘target’ of phasing out polluting vehicles eight years before.

However, with independence on back burner – it is the first SNP programme since 2011 that did not focus on a referendum – and following the General Election losses, it appears that the SNP is now firmly re-focusing on the day job and looking to regain lost momentum.

There were firm commitments made in the programme, enough ‘red meat’ to put the Scottish Government back on track after its set-back of the General Election where it lost 21 MPs. There is also enough in these measures that can be embraced by all parties across the political spectrum.

There is to be a new Climate Change Bill; a deposit return scheme for bottles and cans; free sanitary products; an extension of free personal care to under 65s, and a lifting of the pay cap for public sector workers.

As part of the commitment to closing the poverty related attainment gap, an Education bill will be the centrepiece of the legislative programme, freeing head-teachers from Council control, sounding rather like a Tory policy.

It is however the issue of tax that has caused the most furore and drawn the newspaper headlines, detonating the heart of the Scottish political debate. The First Minister announced the launch of a discussion paper on the use of income tax in Scotland to support public services, calling for an honest debate on the “progressive” use of Holyrood’s tax powers.

Tory leader, Ruth Davidson, smelled blood and the potential of a broken election promise. In its manifesto for the 2016 election the SNP noted that “we will freeze the Basic Rate if Income Tax throughout the next parliament to protect those on low and middle incomes”.  Ms Davidson proclaimed that the “SNP is coming for the paycheck of everyone earning less than £43,000”.

This is dangerous ground for the SNP and voters have better memories for promises broken than promises met. Hence, the cross-party appeal to hear their ideas on tax and co-operate on the budget, spreading any potential fallout.

As the Tories want Scottish tax rates static or cut they are out of the equation, but there is support from the other parties for such a debate on tax rates. Ms Sturgeon wants to force Labour, and the Lib Dems, who have been urging her to use Holyrood’s new income tax powers, to put their money where their mouths are.

As we mark 20 years of the referendum that created the Scottish Parliament, there is ongoing questioning of delivering further devolution to Holyrood, given that it is not seen to use the powers it currently has. A move on tax would clearly address this.

With fortunes on the turn, Ms Sturgeon knows that she needs to be more radical, and she knows that passing Bills at the current rate of four a year won’t cut this, nor will tweaking services with the same old Budgets.

If tax is to go up to fund long-term change, she is clearly looking to make this a cross-party issue with other non-Tory parties, pre-empting charges of electoral dishonesty.

The onus is now on the opposition parties to decide whether to back her minority administration, or back the Conservatives and sack her.

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