Scotland is becoming a high tax nightmare under the vengeful SNP
There are two important questions to be asked about the projected £1 billion black hole in the SNP government’s spending plans.
The first is: if this is how a devolved Scotland manages its finances with the help of a Union dividend of up to £2000 per person – the difference between public spending in Scotland and the UK average – then how on earth would an independent Scotland cope without the help of the UK taxpayer?
The second question is: what have SNP finance ministers been playing at these last 16 years?
This morning it was revealed that a coalition of the great and the good – “campaign groups, think tanks, charities and trade unions” – have signed a missive insisting that this week’s Scottish budget announcement must prioritise “investment” in public services (what most people would more accurately call “spending”) and “tax reform” ( or, perhaps, “tax rises” for those already paying the lion’s share of income tax).
And they seem to be pushing at an open door. Deputy First Minister and Finance Secretary, Shona Robison, is expected to announce a new tax band for Scotland’s higher earners when she stands up at Holyrood tomorrow to unveil her budget measures. Scots already pay some of the highest levels of income tax anywhere in the UK, but if expectations are correct, those pips are about to squeak even louder.
This will all be very satisfying to the likes of the Scottish Trades Union Congress, which proposed that a new tax band was introduced for the sake of fairness and equality. The key to the argument about tax and spend, however, lies in whether the high taxes already levied in Scotland have led to a measurable improvement in equality or public services.
Certainly, it’s difficult to detect any improvement in the two largest services of health and education. The most recent Pisa (Programme for International Student Assessment) figures painted a gloomy picture for achievement in Scotland’s schools, to the extent that on BBC’s Question Time last week, Holyrood minister Angela Constance, rather than defend her government’s record, resorted, seemingly, to denying that Scotland was once proud of its education system.
Health is facing its own problems, with one in seven Scots languishing on a waiting list for treatment. So where has the money raised from Scots been spent? And what impact has it had? More to the point, if extra revenue raised so far has failed to improve services, what guarantees are there that even more cash squeezed out of Scotland’s wealth creators and high earners will achieve what previous hikes have failed to achieve?
Is it perhaps possible that higher taxes may not be the silver bullet that Scotland’s civic society hopes they are? Yet where are the trade unions, charities and think tanks calling for measures that will kick start the kind of economic growth that actually could have a greater and more sustainable impact on anti-poverty measures?
Tax and spend are only two weapons in the Scottish Government’s arsenal, and fairly blunt and ineffective weapons at that. Alex Salmond, first minister from 2007 to 2014, was known to hold strong pro-business instincts, a stance that was almost completely repudiated by his successor, Nicola Sturgeon, who seemed to view business as a tiresome necessity rather than an essential part of the economy.
Humza Yousaf started out as First Minister earlier this year with good intentions, recognising the importance of cultivating a much more pro-business environment in which companies could grow and prosper.
Yet an announcement of yet more taxes in order to fund extra welfare spending would represent a retreat into the Left’s most comfortable of comfort zones, while leaving unanswered the vital questions as to what is needed to energise the private sector and revitalise the entrepreneurial spirit that once shaped Scotland.
Given the Scottish Government’s record so far, higher taxes for the higher paid will lead to no obvious improvement in services, thereby undermining the whole ethos behind such a strategy. And if it results in even a small number of Scots moving out of Scotland to lower taxed areas of the United Kingdom, the SNP risk initiating a disastrous vicious circle of higher tax levels and lower tax take that would have exactly the opposite effect they hope for.
