Brian Monteith: Davidson’s recipe for tax bake-off

Ruth Davidson's new tax commission shows the Scottish Conservatives are moving away from the consensus of Holyrood politicians. Picture: Scott Louden
Ruth Davidson's new tax commission shows the Scottish Conservatives are moving away from the consensus of Holyrood politicians. Picture: Scott Louden
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Hammering those who create the wealth is no way to run a progressive country, as new move recognises says Brian Monteith

WE HAVE already seen this year how the complacent and all-too cozy consensus of Scottish political economy can be wrong-footed by competition from beyond the Holyrood bubble.

When John Swinney pronounced his replacement for Stamp Duty as a mark of Scotland’s more progressive social democracy, few were willing to challenge him, preferring the conceit of whae’s like us.

Roll on more powers, our MacChattering classes might be heard saying, as they patted each other on the back when sipping their Fairtrade mocha latte during elevenses. In their self congratulation they possibly stopped to ponder what further progressive tax reforms they could propose to punish Scotland’s nouveau rich (merely for being rich) and redistribute to the poor.

Such ideas could become policies and in time appear in columns like these before entering manifestos and reaching the statue book. More taxes on land, property, consumption (especially luxury consumption), sinful eating and drinking, the creation of wealth – or added value as they prefer to say.

Such redistribution would not only demonstrate the compassion of the political class spending other peoples money, it would demonstrate the superiority of the Scottish politician, be it the one that dwells at Holyrood or becomes an emissary to Westminster, and how more progressive Holyrood is over Westminster.

Who, then, would have thought that George Osbourne, the Toff Tory-boy that so many self-regarding politicians ridicule and underestimate, would deliver a more liberal reform and force the ever-so-nicer Mr Swinney back to Parliament to eat humble pie in full public gaze?

And so with more powers coming, there will be more competition with other jurisdictions, be it those within the UK, or beyond, such as with Ireland or Luxembourg, Switzerland or the Baltic states. It is therefore vital that we do away with the self-satisfaction and pretence that we care more than others in the rest of the UK or some of the more capitalist redoubts of Europe. We need to start considering what damage as well as what good our tax system does; is it fit for purpose?

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It takes no more than a cursory glance to quickly establish that the vast majority of our elected politicians and their camp followers care only about how high taxes can go before votes might be lost.

How often do you hear a politician talk about growing the number of top-rate taxpayers in Scotland rather conceiving of policies that will drive them beyond our nation’s reach? There are only 13,000 of these fortunate souls in Scotland, two thousand fewer than attended Tynecastle Park on Saturday. Should we not be looking to double or treble that number so that their contribution to public finances helps reduce the load taken by the low paid and middle income taxpayers?

Fortunately the Scottish Conservatives have, over the Past few years, begun to make more of the noises that, if listened to or copied by their competitors, could grow our entrepreneurial and aspirational classes. They have started to talk seriously about tax cuts, using the powers that Holyrood already has, the new ones it takes responsibility for this year, and those proposed to be devolved in the near future.

As I have argued before, this is not just a (long-overdue) seminal change by the Scottish Conservatives, it is also a significant development in Scottish (and indeed British) political dynamics. It may not bring immediate electoral reward but I have no doubt that in the coming years it will begin to pay political dividends for Scotland’s centre-right.

The latest step in Ruth Davidson’s transformation of her party was her announcement last week of the composition of ITS Tax Commission, first announced in October, that would “study how best [these] new taxes should be used to boost economic growth in Scotland”.

Much as I welcome the initiative, I was rather disappointed in the composition of the commission.

Where are the likes of Ivor Tiefenbrun, a man of great inventiveness whose manufacturing success has defied the theorists and has been a regular contributor to political debate in Scotland? Where are the many quietly conservative business leaders who have the responsibility of paying out salaries for hundreds of staff every month? It is not enough to invite them to make submissions, surely one or two might have helped guide the commission towards what issues must be considered.

The choice of Ian Macmillan, the former director of the Scottish CBI, as the commission’s chairman seems more curious still, for I cannot think of anyone in business who has been more outspoken in opposing differential taxes between Scotland and the rest of the UK. Now it his job to suggest where they might be most effectively made.

Whatever the thinking, the Tories deserves credit for the initiative.

Only this week the Taxpayers’ Alliance demonstrated just how ridiculous our current tax system is. It pointed to how, with National Insurance added in, as well as student loan repayments, many young professionals taxes are equivalent to a basic rate as high as 48p on an income as low as £23,000. Even for those without student loan repayments the tax rate is well over 33 per cent.

Shaping a new tax system that will keep such graduates in Scotland because it pays them to do so should be one of the commission’s goals.

Davidson and her team must look to enlarge the cake for all the nation before sharing it – while Sturgeon, Murphy and Harvie remain fighting over the servings of their decomposing half-baked bio-diversity tart.

If political life were fair – and just reward recognised an honest recipe – Ruth Davidson’s Clootie Dumpling would win the great Scottish bake-off hands down.