Leader comment: Scottish Government should heed warnings on a taxing problem

SINCE coming to power at Holyrood in 2007, the SNP has skilfully balanced radical rhetoric with rather conservative action.

Scottish Government ministers have frequently described to us a Scotland that is instinctively of the left. But while romantic stories of peculiarly compassionate and selfless Scots may have struck a chord with voters, the reality is that the SNP leadership has always understood that romantic stories are one thing and real world action quite another.

When it comes to the self-interest of voters, the modern SNP has been every bit as understanding as New Labour in its heyday. We have only to look at the Scottish Government’s flagship policies to see that this is so.

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Free university tuition, the long-long-standing council tax freeze, and the abolition of prescription charges were all sold as policies that would create a fairer Scotland but the undeniable truth is that all of these measures disproportionately benefit the well off.

Cabinet Secretary for Finance, Economy and Fair Work Derek Mackay delivers the Scottish Government's Stage 1 budget. Picture: PACabinet Secretary for Finance, Economy and Fair Work Derek Mackay delivers the Scottish Government's Stage 1 budget. Picture: PA
Cabinet Secretary for Finance, Economy and Fair Work Derek Mackay delivers the Scottish Government's Stage 1 budget. Picture: PA

There is some sensible politics behind this, of course. The SNP’s rise to power was not enabled by barricade-manning revolutionaries but by the support of cautious middle-class voters who believed that the party offered the prospect of stable, competent government. Ministers have always been concerned not to spook these particular horses.

Yesterday however, the Scottish Government may have decided to push its luck with the voters it has long depended upon.

A vote to effectively raise taxes for middle and higher earners in Scotland scraped through at Holyrood. A great many Scots will now pay hundreds of pounds more in tax than those south of the border.

Finance Secretary Derek Mackay promises this measure will mean a £68million boost for public services. That would certainly be welcomed.

But Mr Mackay must be careful that his plan doesn’t backfire.

The Chartered Institute of Taxation yesterday warned that, as the tax gap between England and Scotland widens, higher earners will seek to reduce their liabilities. Some may even decided to relocate to avoid what they perceive as unfairly high taxation.

There is a fine balancing act to be performed, here, and we sincerely hope Mr Mackay is able to pull it off.

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Scotland must be as attractive as possible to potential investors and highly skilled professionals. Is the Scottish Government making a persuasive case that it is? We’re not so sure.

Tax policy designed to raise more cash for public services will not achieve that objective if it discourages investors and workers.