Brian Monteith: SNP ministers have their hands in your wallet

Finance Secretary Derek Mackay. Picture: Lisa Ferguson

It could have been so different, for the SNP leadership does not have to behave this way; there are other routes to achieving independence such as making Scotland a successful beacon of free enterprise with high tax revenues and good public services – but the SNP has an entirely different strategy and Derek Mackay’s Budget has been designed to fit neatly within its simple parameters.

The SNP has long abandoned its initial strategy of demonstrating it could run the Scottish economy and our public services at least as well as the previous Labour and Liberal Democrat coalitions. Westminster could, and would, be blamed for everything and anything.

As long as the SNP has existed Westminster – a dog whistle for England – has been blamed for everything and anything, it’s in the blood. There has never been a time, not even in the boom years of Gordon Brown’s inflated spending, that Westminster was generous enough with taxpayers’ money. When oil revenues were high, the SNP would complain Scotland was transferring too much into the UK’s social solidarity welfare transfers; when oil revenues became low, the SNP would whinge that Scotland was receiving too little under austerity economics.

Once it lost the referendum, it was clear that simply blaming Westminster was not enough. The SNP needed a new strategy – it’s called differentiation, and put simply it means accentuating the differences between Scotland and the rest of the UK where they exist and creating new ones where they are absent. Paradoxically, while the SNP wants differentiation with the UK, it wants alignment with the EU – for that too is differentiation – but it ignores where Scotland’s interests lie.

Suggesting being Scottish is through blood and soil inherently different from the rest of the British Isles already existed at a fairly low level, such as setting different alcohol levels for drink driving and introducing minimum pricing of alcohol, but thanks to the change in management the new improved strategy has ramped up differentiation. Having previously been in your face, SNP politicians now have their hands in your wallet.

Any Scottish state institutions that suggest Britishness have to be cleansed of possible sentimental attachments to the past and our cultural behaviour has to be marked as different, be it in our attitudes towards EU immigration or an assumed more international approach. British Transport Police is no more in our brave new Scotland and our international orientation is no longer to Hong Kong, Bombay or Houston but to the Faroes, Greenland and Lapland. At every level of the Scottish Government differentiation is being imposed, be it subtly through the nonsensical named persons scheme, or more obviously by imposing Gaelic language signs upon areas with no such historical association or repainting Gaelic liveries of police cars in towns where Polish and Urdu are more likely to be heard or needed. It is because the SNP strategy of differentiation requires Scotland to have a “more progressive” taxation system that the SNP leadership has decided to take the gamble and break a commitment made only last year not to raise income tax. Indeed the promise was so good it appeared in the SNP manifesto four times – yet still it has counted for nothing.

By introducing a reduced rate for the lowest paid taxpayers and increasing the taxes for higher earners, while having different thresholds too, Nicola Sturgeon can proclaim “whae’s like us” in being more modern, fair and compassionate. By lowering the tax rate of the lowest paid the SNP Government will claim it has given the majority a tax cut, but it is all smoke and mirrors and the truth will out that the majority, possibly all of us, will be worse off.

Everyone earning more than £26,000 will certainly pay more, as the SNP Government’s own charts show, but even those lower earners receiving a tax cut in one hand will then face a likely council tax hike paid out by their other. The limited tax cut is therefore nothing other than political cover for introducing the “tax differentiation” but has the benefit of being a political bribe, albeit a momentary and unconvincing one worth less than a postage stamp a week. The known and unknown consequences – such as those losing marriage or pensions allowances – will appear in the next few years, with worse to come.

There was no need to raise taxes in Scotland at all. We know, because both the Scottish Parliament’s independent researchers and the Fraser of Allander Institute have demonstrated the Scottish Government’s finances are not being cut but will rise slightly in the years ahead. No blame for Westminster there.

It is the Scottish Government’s own independent Fiscal Commission that has raised the alarm bells by downgrading its expectations of Scottish economic growth for the next five years to below 1 per cent, less than half that of the UK in the same period and costing a total of £2 billion in economic activity that reduces tax revenues. Again, it is not Westminster but the consistently poor economic growth under the SNP’s economic management that is leading it to raise income taxes directly and council tax rises indirectly.

Even then it is a botched job, the expected revenue gain at £164 million being less than the commission’s prediction of a £200m revenue shortfall.

Looking further ahead can only be described as a fiscal nightmare, with the revenue shortfall growing to just south of £1bn in five years. This can only mean one thing: more home-grown cuts and tax rises must follow.

The commission explains that Scotland’s endemic low productivity and ageing population are feeding the poor economic growth – but the Government’s answer of raising taxes must only exacerbate those problems. What is required are flatter lower taxes to attract high earning, skilled workers who will reverse our economic fortunes. That would be differentiation – but being capitalist, it is not as the SNP knows it.