Kenny MacAskill: Income tax is not where real money is

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Holyrood’s debates over recent days on income tax and the budget have all been rather contrived; outrage from the Tories that the wealthy have to pay more, anger from Labour that the rich aren’t squeezed enough and smugness from the SNP that everything has been resolved by increased revenue for the coffers.

Played out for some time before, the outcome was certain once SNP and Greens reached a deal.

It's all smiles on the steps of Bute House, but the divide between Nicola Sturgeon's Scotland and England is widening. Picture: Scott Taylor

It's all smiles on the steps of Bute House, but the divide between Nicola Sturgeon's Scotland and England is widening. Picture: Scott Taylor

However, despite the best endeavours of politicians and press, it never really resonated with the public. There was no spontaneous uprising of even just modest anger, other than among a partisan few, though equally neither has there been an acceptance that all problems in public services have henceforth been resolved. The public’s stoic acceptance of a modest tax rise for the wealthier and small tax cut for the poorest confirms that.

It wasn’t so much the certainty of the outcome but the outcome itself that led to that. Hyperbole from all sides was eschewed by most people who just saw tax rises as inevitable and a redistribution of the burden as fair. The idea that more could be done with less, as advocated by the Tories, was calmly rejected by them as absurd but equally they’re not persuaded that public services have been saved by the SNP and scepticism still remains over their hyperbole.

Likewise, Labour’s demands for higher taxes simply seemed marginal, if not irrelevant, never mind their own failure to do so when in office.

It’s doubtless testimony to the budget being quite astute, for which the Finance Secretary Derek Mackay must take the credit. It is never an easy task to set a budget and the difficulties are compounded when you’re a minority Government, albeit only by a whisker but whether by one or a 100 you’re still dependent on forging an alliance. That comes not just with a price tag but also some political juggling, which Mackay has done extraordinarily well.

Still, it was an historic moment with the setting of different rates and bands than those south of the Border. It’s perhaps for that reason that the Tories were particularly strident, rather than in defence of their wealthy backers and the limited increased tax that they’d face. Likewise, that was why the SNP consciously decided to “ca’ canny” over just what was imposed and how the burden was shared.

What matters now is where the debate goes from here and the resulting complications for the parties. It won’t be immediate but it brings new challenges, incorporating age-old arguments about tax and spend and the constitutional issue in Scotland. For the passing of the budget sets different trajectories for the two regimes north and south of the Border, where already the level and availability of public services has produced a clear divide between the nations. Not just in the availability of free prescriptions and the absence of student tuition fees but a plethora of other benefits help mark the line that’s crossed when moving in either direction.

Moreover, whatever challenges there are and will be faced by public services north of the Border, they’re as nothing to the crises faced south of it. The health service is the clearest example of that but others abound from local government to police and prisons. Modest revenue increases won’t prevent cuts north of the Border but the differentiation with south of the Border will only increase, as slash-and-burn policies afflict public services there.

It still causes problems for the Tories and the SNP. The fact of the matter seems to be that the public like the services that are available in Scotland, even if they complain about their quality. They’re happy to pay a bit more but not a great deal more.

READ MORE: SNP tax rises could harm struggling High Street, retailers say

Rolling back from them becomes politically hard to do and Ruth Davidson has even jettisoned arguments on ending free prescriptions. The Tories can continue to complain about the quality of public services but the difference with the situation across the border is only going to increase. Talk of tax cuts will be even more difficult as it will mean a rollback on significant public services that are popular or the privatisation of them that most certainly isn’t. It won’t just then be London Tory cuts being imposed but Scottish Tory cuts that will become the political debate.

It isn’t going to be easy though for the SNP as the increased revenue is modest and the demands are growing. They’ve foresworn cutting any of the big tariff items and face the danger that services continue to decline, albeit more slowly than south of the Border – if they are still available there. The difficulty is, as the saying goes, “all politics is local” and comparisons with Wales or West Yorkshire mean nothing to someone just wanting the service here and now in Scotland.

But, it does mean that historic tax-and-spend is here to stay in Scotland, as it’s what people want. There’s an acceptance that it is the Government’s duty to provide for all and for it to be done on an equitable basis.

No one loves paying tax but the notion that it’s reprehensible is absurd. It’s required and for the collective good. There’s a limit though to where it can go before it’s unpopular and counterproductive. That balance will have to change further in coming years but that can be refined.

READ MORE: Poll: Most Scots back SNP’s tax rise plan

Where the debate needs taken is onto wealth and away from wage. It’s not high earners but those with assets who fuel growing inequality. Taxation on wealth is mainly reserved to Westminster, yet it’s critical to providing greater revenue and ensuring increased fairness.

It’s those with land, property or share portfolios and offshore assets that need to pay more. That’s where real wealth is, not high wage earners. It’s not just the principle but the constitution that’s involved there. If wage taxes can be decided here, why not wealth and if Westminster won’t why can’t Holyrood? Let debate commence.