Springing the Trap
Posted on December 16th, 2016
by Rab Bruce’s Spider
It’s easy to criticise any Government’s Budget. After all, the aim is to give money away with one hand while taking it with the other, so there is always something for critics to focus on.
Needless to say, the Scottish Tories have focused on Income Tax. This is no real surprise since David Mundell, Secretary of state for Scotland, has openly admitted that Income Tax was only devolved in order to set a trap for the Scottish Government. If they do not alter tax rates in Scotland, the Tories can continue their cry of “Use the powers you’ve got!", while using them to reduce taxes would result in howls of outrage from English taxpayers who would feel they are being asked to subsidise Scotland, and increasing taxes would permit the Tories to proclaim that Scotland is the highest taxed region within the UK. I say “region", incidentally, because Mundell has also compared Scotland to Cumbria when talking about the possibility (or lack thereof) of a special Brexit deal for Scotland. Yes, Scotland’s representative in Westminster thinks Scotland is comparable to a region of England.
But let’s get back to the budget. As you’d expect, the Tories are not at all interested in the fact that more Scottish children than ever are living in poverty even if their parents are working, or that the use of food banks continues to increase at an alarming rate, or that 300 people slept rough in Edinburgh last night in order to highlight the plight of the homeless. No, what Ruth Davidson and her chums are upset about is that Higher Rate taxpayers in Scotland are having their taxes hiked.
Yes, the Tories claim the Budget announced yesterday, which will take effect from April 2017 as far as Income Tax is concerned, included a tax hike. This is an interesting choice of words, since a Higher Rate taxpayer will see an increase in their tax bill next year of …. wait for it …. £0.00. That’s correct. a higher rate taxpayer will pay no more income tax next year than they’ve paid this year; nada; zilch; diddly.
What the Scottish Government are proposing is that the wealthiest earners in Scotland should not be handed a tax giveaway as the rich in England will be given by Westminster. By any stretch of the imagination, that’s not a tax hike. OK, inflation may mean those people have a little bit less disposable income and it is possible that some people whose income is close to the Higher Rate threshold will move into that band if they receive a pay rise, but they’ll still be better off than not receiving a pay rise since, contrary to what the Tories would have you believe, the Higher Rate does not take away all your income, it only charges you 40% on the amount of income you earn which is above the threshold. In other words, would you rather receive an extra 60% of something or 0% of nothing? Bit of a no-brainer, really.
The other issue is how many people this actually affects. Estimates vary, but it is claimed by the Telegraph that only around 400,000 people in Scotland pay Higher Rate tax. That’s around 1 in 10 of the eligible workforce. In other words, 90% of the working age population will be treated exactly the same as taxpayers in England, while the top earning 10% will pay slightly more than their English-based counterparts.
Perhaps what the Tories are suggesting is that the burden of helping to counteract the cuts to the Scottish Block Grant which have been imposed by .. um, the Tories, should fall on the poorest, or the disabled, or the unemployed? Come to think of it, when you look at how the Tory Government in Westminster behaves, that’s exactly what Ruth Davidson and her pals must want.
Of course, nobody likes paying more in tax. But that is another symptom of the “Me First" culture which now dominates the UK mindset. In other countries, citizens pay more in tax but are reasonably content to do so because they know their taxes fund things like pensions and education, etc. Yet the UK persists in telling its citizens that taxes are bad and should be reduced. This sort of thinking goes hand in hand with the economically discredited Austerity programme, and a system which has left the UK with a widening equality gap, one of the worst pensions in Europe, and the ever-increasing drive towards a low pay economy.
As for the Scottish Budget, it’s the usual mix of things you’d expect from a budget, but the one thing Derek Mackay, the Finance Minister, has done is to gently spring the Tax Trap in a way which will only outrage the wealthiest section of the community. To be honest, if somebody needs to pay a little extra, at least those people are more likely to be able to afford it. They may feel hard done by, but they have the comfort of knowing they are earning more than 90% of the population and that they needn’t worry about relying on food banks.
Government spending is always a question of priorities. What the Scottish Tories have done with their outcry is demonstrate exactly where their priorities lie, and it’s not with the welfare of the majority of Scots.