Finally, a real debate on using our powers

Bernard Harkins, Scottish Labour’s MSP candidate for Midlothian North and Musselburgh, reflects on the response to Labour’s 1p tax policy and welcomes the debate it has generated.

 

“You don’t usually win elections by promising to put up tax.”

This comment was made to me recently during a discussion about the Labour Party and the Scottish Parliament elections. 

It’s been an interesting few weeks since Kezia Dugdale announced our 1p tax policy. Our political opponents have accused us of passing on austerity to those who can least afford it, we’ve been told that it’s not progressive and, perhaps a more informed discussion that I’ve been involved in on twitter, the policy has been questioned on the basis that an increase in council tax would be a better mechanism for delivering what we are trying to achieve.

These attacks have reminded me of the 1992 general election when the Tories attacked the ‘alternative budget’ put forward by John Smith. I fully expected to see, and I guess we still might, an updated version of the Tory billboard poster depicting ‘Labour’s Tax Bombshell’.

But I think there have been 3 significant, positive developments as a result of the announcement of our tax policy:

Debate on taxation

The policy has kick-started a debate about political choices and how we pay for the kind of society we want. This debate has been broadly welcomed.

Joyce McMillan writing in the Scotsman said

“Labour’s plan for a 1p rise in income tax has done the level of political debate a service.”

And Owen Jones, writing in the Guardian said

“Labour’s plan for a 1p income tax hike in Scotland would provide an alternative to austerity and help reclaim the torch of social justice from the SNP.”

And just to reinforce this, the two hustings that I have been involved in so far, both with S4-6 pupils,  have also included questions on tax. So the debate is certainly not just happening in the press or social media bubble. People are interested in what we’ve announced and are engaged with the discussion.

Progressive

The initial attacks from our political opponents were predicated on a view that our policy was not progressive; that rich and poor would pay the same. Under the weight of evidence from a number of different think tanks and commentators this claim has been exposed as being pretty threadbare.

Even Common Weal, not normally noted for their support of Labour Party policies, have supported the argument that this policy is progressive. As Ben Wray says:

“The policy is progressive on the basic metric that the poorest are having their tax burden reduced and the richest having it increased.” 

However, it is perhaps the briefing from SPICe (Scottish Parliament Information Centre) on the Scottish Rate of Income Tax  (SRIT) which has done most to answer and counter the arguments that use of SRIT is not progressive.

“The proposal to raise SRIT by 1p and offer a £100 rebate for those earning £20,000 or less leads to an increase in income for the poorest 30% of households, “with the richest paying significantly more than now (up to an additional £1,040 per year in the wealthiest 10 per cent of households).”

Public Attitude

On top of all of this, and despite what our opponents say, the response that I’ve received when we’ve been out campaigning has on the whole been receptive to what we are trying to do. People generally seem to be prepared to pay a bit more tax when they can see that it is being targeted towards a particular outcome.

Interestingly enough, on this point when I was looking for information for this blog I found an article in the Independent about the 1992 general election.

One of the points made is that people were not averse to high taxation per se, but are concerned with how effectively money can be spent to improve things. This tends to support what I am finding during this election on the doorstep and out in the streets.

45 days to go….

No one fighting this election for Labour in Scotland underestimates the scale of the task ahead.

But under the leadership of Kezia Dugdale and Alex Rowley we are setting out clear and different policies from the SNP on tax, fracking and a willingness to use the powers of the Scottish Parliament.

The choice, and how we use those powers, is for the people of Scotland to make in 45 days time.

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6 thoughts on “Finally, a real debate on using our powers

  1. Why should we in Scotland pay more for “the kind of society we want” when we have already paid, through income tax and other forms of taxation to the UK Treasury for “the kind of society we want”?
    Are you saying that to improve the NHS, Education and so on that we have to pay twice in Scotland?

    1. The amount of tax most of us pay has reduced almost every year for the last few years. The increases in personal allowances, now up to £11k, mean we are all paying less income tax into our shared pot. The freeze on council tax, not keeping up with inflation, means we are all paying less into our local government shared pot.

      The Tories haven’t delivered many highly visible tax cuts – apart from the top rate cut for those most able to pay. But they have in fact been cutting taxes for almost everyone through these sorts of measures.

      So the issue isn’t about paying twice, it’s about paying enough. Enough to fund the sorts of public services we want.

      Looked at another way, 20 years ago the basic rate of income tax was 23% (3 points higher than now) and VAT was 15% (5 points lower than now). Income tax is progressive, meaning those more able to pay pay more, so the wealthier have benefited most from it being cut. VAT on the other hand, despite being intended as a tax on luxuries, in fact impacts on low earners disproportionately, so increasing it has been regressive.

      If we want to be progressive, and properly fund our public services, income tax is a good place to make a modest increase to make a big difference. It’s not about paying twice – it’s about paying enough to keep our vital public services functioning.

      1. Thankyou for your explanation, however, no matter how you explain this idea, it still amounts to us in Scotland paying twice. I would add that, re Council Tax, according to SPICE in Sept last year: “”the money provided by the government to freeze the council tax has resulted in local authorities receiving more income than they would have done by increasing rates by RPI (retail price index)”.
        If this is true then we not “paying less into Local Govt pot”, as the money paid by Scottish Govt comes from the Block Grant which in turn comes from the UK treasury, which in turn comes from us taxpayers..

  2. As an S.N.P member, I’m glad that labour have raised the tax issue. A more progressive system would certainly be a positive policy development. However, in present circumstances, I can’t see the case for raising it yet. Since we can’t yet vary the bands, or indeed the tax threshold, you would, in fact be making working people, many of whom have not had a pay rise for years, pay for Osborne’s austerity. There is also the fact that there is no possibility of running a rebate system using the local councils.
    The latter points to the back of an envelope nature of the policy; not thought through and done for political expediency. Given labour’s Westminster’s voting record on austerity, it’s also hard to believe labour would be advocating this, had they the slightest whiff of a chance of power at Holyrood.

  3. As someone who has worked in the public sector and been a union rep representing members on low pay I can appreciate the point you make about pay rises, however this policy does have protection built in to protect the low paid.

    I guess we’ll see later today when the SNP announce their policy on income tax and we announce our policy on the council tax as to where the debate on tax and redistribution is heading.

    In terms of whether we have a chance of power at Holyrood, well that is a decision for the voters and people in Scotland don’t always appreciate being told what they are going to do before it happens, so lets wait and see shall we.

    1. Your point about the voters is de jure correct, and as a former trade union hack myself, I will, in the time honoured phrase, take cognisance of this. You didn’t really need to wait until the S.N.P. published their plans, as Nicola telt Kezia four times at the last F.M.Qs that Osborne’s tax cut to the wealthiest would not be passed on. For some reason, Dugdale chose not to hear it; she’s not stupid, so what was going on, I wonder. I have already pointed out the problems with the powers as they stand,but I don’t see where you see the built in protection for the low paid.
      As I noted previously, I’m glad that Labour and the Lib Dems raised the issue, since it makes it harder for the parties, including, to be fair the S.N.P. to avoid the issue in future.
      It is a pity, however, thatthe power to raise the other forms of taxation were not included.

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