Given the way that various economic and social trends are heading, it is inevitable that a higher level of taxes is here to stay. Regardless of which party is in power, at Holyrood or at Westminster, their task will be to try and minimise tax rises rather than attempting to reverse them.

But this does not mean sentencing the economy to a slower growth rate. Indeed, improving the quality of life and productivity growth rate may well depend on such tax rises. It’s worthwhile revisiting the various reasons why higher taxes are inevitable. They are plentiful.

The most obvious is the ageing demographics of Scotland and the UK. This is a double whammy as it results in fewer workers, and so lower tax revenues, as well as higher demand for expensive public services like health, social care for the elderly, and pensions.

Next comes the increase in defence spending that has been called for after the Russian invasion of Ukraine. This will not come cheap. Some had thought that tanks were outmoded, not now. More aircraft too and what role for the navy? Whereas defence had been a source of savings in past decades, allowing funds to go elsewhere, in future years the reverse will be true.

The war in Ukraine also brought to light the need for greater contingency planning, especially with respect to the storing and transmission of energy. Covid too emphasised the need for building in spare capacity, rather than depending on pure efficiency, especially in relation to the NHS but also in other areas like education and the courts.

Then again, there is the impact of a decade of austerity, such that underfunding since 2010 had left the NHS short of capacity even before the pandemic struck. Staff shortages will need to be filled and probably paid more too. Austerity also took its toll on public sector infrastructure, such that a higher annual investment level is needed in order to maintain, let alone improve, standards. The rail system is already in crisis.

Reaching net-zero carbon emissions will also have implications, both in terms of the need for greater public investment in infrastructure and home insulation, as well as in declining carbon-related taxes. In addition to the above could be added a litany of further pressures on the public purse, including public sector pay, ‘levelling up’, local government funding, childcare provision etc. Furthermore, in Scotland, the situation might be even worse than at the UK level with a faster ageing population, ambitious child poverty targets, and a ferry system in dire straits. Independence, at least initially, would bring further funding pressures.

The UK Government must not be tempted by calls for the kind of tax cuts Liz Truss sought to introduce (Picture: Jacob King/PA)

In most of these cases, it is not a question of ‘if’ they will happen but rather of ‘when’ and by how much will they incur extra costs. Some of these factors have been investigated by the Office for Budget Responsibility which, only last year, found that “the pressures of an ageing population on spending and the loss of existing motoring taxes in a decarbonising economy leaves public debt on an unsustainable path in the long term”.

The oft-heard retort to all this is that higher taxes will kill off economic growth and make matters worse. Such calls hark back to the 1980s, a very different time, when many of the trends mentioned above were heading in the opposite direction. Furthermore, personal taxes were very high, for some, and there was much more scope for public sector cuts, not least in nationalised industries, as well as swelling tax revenues from the North Sea.

The situation today is not comparable. Now, higher public spending and taxes are essential in order to improve productivity, they are not holding it back. The impact of improved public infrastructure, increasing connectivity; better physical and mental health services, that enable people to return to work; increased childcare provision, to help working families; and greater capacity building, that means the whole economy doesn’t have to shut down in the event of a pandemic or an energy crisis, all mean that more, not less, public spending is needed.

We should not be looking towards the USA, which has better demographics and an inadequate health system, but over to mainland Europe where circumstances are far more comparable. There we can also see that many of the most successful economies thrive while raising more from taxation than in the UK, or Scotland. This includes not just smaller economies like Denmark and Belgium but also bigger ones like Germany and France.

Of course, part of the trick is to spend that money wisely. Relatively low taxes did not lead to the UK being a high-productivity nation in the past but neither will higher taxes automatically rectify the situation. What it will do is allow for the potential to change and improve.

Such a position might be thought of as the ‘new normal’. One where the age, health and defence of the population demands a higher level of public sector spending than in the past few decades, as well as helping make up for a decade of under-investment. Which is why it’s more a question of designing smarter public services than cutting taxes.

Will any of this come about? Yes, is the inevitable answer. The real question is, will it come about in a well-managed way or will it arrive after a disastrous, Liz Truss-like experiment in trying to magic up a low-tax alternative that doesn’t exist? Alas, given the political world we currently inhabit the sensible route cannot be guaranteed.

John McLaren is a political economist who has worked in the Treasury, the Scottish Office and for a variety of economic think tanks

Why high taxes are good for the economy and those calling for 1980s-style cuts are wrong – John McLaren

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