Joyce McMillan: A penny for your thoughts on tax

LABOUR'S plan for a 1p rise in income tax has done the level of political debate a service, writes Joyce McMillan
Kezia Dugdale says a tax rise would raise an extra £500 million a year to help protect schools and colleges. Picture: PAKezia Dugdale says a tax rise would raise an extra £500 million a year to help protect schools and colleges. Picture: PA
Kezia Dugdale says a tax rise would raise an extra £500 million a year to help protect schools and colleges. Picture: PA

A penny for Scotland’s future. It’s an idea that’s been tried before, of course, not least back around 2000, when both the SNP - with the “Penny for Scotland” campaign - and the Liberal Democrats, who wanted an extra penny for education UK-wide, took the risk of advocating a modest 1p increase in the standard rate of income tax, to help support the kinds of public services any serious social-democratic nation should prize.

History tells us that the idea came to nothing, in both cases; the SNP abandoned the “penny for Scotland” policy as early as 2002, after discovering that it was less than popular. Now, though, the penny policy is reborn; and its proud parent is Kezia Dugdale, leader of the Scottish Labour Party, who this week did the general level of Scottish political debate a service by announcing that her party would support a 1p in the pound increase for all income tax payers in Scotland, in order to raise an extra £500 million a year, and - in particular - to protect Scotland’s schools and colleges from John Swinney’s most recent £350 million cut in local authority spending. In the Scottish Parliament on Wednesday, Labour and the Liberal Democrats supported the increased tax rate, and the SNP, Tories and the Scottish Greens opposed it. Cue much ribaldry from Labour and the Liberal Democrats about the sight of the SNP standing “shoulder to shoulder with the Tories”, the very position for which the SNP routinely savaged Labour and the Lib Dems throughout the referendum campaign; but also a sigh of relief from those who have been waiting patiently for the moment when MSPs would actually begin a substantive discussion on how to use the new tax powers they have lately acquired.

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Before the SNP are denounced as a bunch of hypocrites, though - for demanding new powers against austerity and then hesitating to use them - it’s as well to consider the foundation on which they have built their exceptional electoral success over the last 15 years. For the SNP’s whole project, in these years - devised by Alex Salmond, and passionately continued by Nicola Sturgeon - has been to tack towards a new social-democratic Scotland, and strongly oppose pro-market extremes of Toryism, while keeping the great mass of middle Scotland firmly on board, through a combination of generous universal spending, and a refusal to clobber ordinary earners with higher income tax or council tax. These policies are widely criticised, of course, both by genuine advocates for the poorest in society - like the Scottish Government’s own “poverty tsar” Naomi Eisenstadt - and by those who never miss an opportunity to attack generous public provision in general; when public money is short, they argue, it should be spent on those who need it most, and not on the “middle classes”.

Yet a brief glance at the political map of Europe is enough to show that those societies which have the best quality public services, the greatest equality of opportunity, and the highest scores on human development and happiness as well as overall economic performance, are the ones which have generously-funded public services used by the whole population, financed out of relatively high general taxation.

To target public spending on the poor, by contrast, is to drain political support away from the public sector, and to make all forms of public provision vulnerable to political attack from those who describe the people who depend on it as “scroungers”, living off the backs of hard-working taxpayers; and the SNP’s aim, since the early 2000s, has been to prevent that drift towards a more divided and right-leaning society by making sure that the broad mass of middle earners in Scotland continue to benefit, and to feel that they receive a worthwhile return for the tax they pay.

Sooner or later, though, that “Nordic” strategy of the SNP’s is bound to reach a crunch point where in order to maintain and develop those public services, Scots must begin to move towards Nordic levels of taxation. SNP diehards, of course, would argue that the Scottish Government cannot sensibly ask for higher taxes for Scotland - or get access to other vital areas of income, such as property or investment taxes - until Scotland is an independent nation; hence the vehemence of the SNP’s refusal, this week, to ask low and middle-earning Scottish taxpayers to bear the cost of austerity imposed by the Tories at Westminster.

Yet it seems to me that Nicola Sturgeon and John Swinney should take care, in the great tax debate, not to find themselves overtaken by events, and by the coming changes in Scotland’s political landscape. The SNP certainly has no reason to abandon the broad-based appeal to middle Scotland that has brought it to this point. Yet asked at First Minister’s Questions yesterday to explain exactly why she would not use a modest tax-rise to offset the worst effects of the austerity she claims to oppose, Nicola Sturgeon could do little more than talk up the alleged “unfairness” of the 1p tax rise, and try to talk down the impact of education spending cuts, while refighting the SNP’s glorious political battles of the last half-decade, ripping into Labour for supporting the Union, and into the Lib Dems for their role in the coalition of 2010-2015.

It’s a tactic that wlll no doubt carry the SNP serenely through the May Holyrood elections, where they seem likely to win more than half of the constituency vote. After that, though, it will be time to look to the future, and to whether Scotland is going to make a kirk or a mill of the new powers coming our way.

The powers are a mess, of course, a nasty political combination of vast new responsibilities and very skewed and limited new tax powers, to which the SNP should perhaps never have signed up in the first place. Sign up they did, though, in the hasty aftermath of the referendum; and now they must start fighting a whole new range of battles for a fairer and more prosperous Scotland, or risk beginning to bore and alienate the very voters whose allegiance they have so painstakingly won, in a decade-long balancing-act at the centre of Scottish politics that requires constant readjustment, if it is to continue successfully.