Leader: What have we to show for highest taxes in UK?

The economic ‘lever’ of tax-raising powers is threatening growth and providing an incentive for many to relocate

Former SNP finance secretary Derek Mackay was criticised after he admitted he was unfamiliar with the principle of the Laffer Curve, which holds that raising taxes reaches a point where doing so becomes counterproductive as avoidance increases and growth falls.

It would appear, however, that his successors in government are similarly ignorant of the concept or do not place much stock in it, as Scotland continues to cement its unenviable position as the most heavily taxed part of the UK.

Anyone earning more than £28,850 in Scotland will now pay more income tax than their counterparts south of the Border – providing an incentive for many people to relocate.

The Scottish Retail Consortium says shops in Scotland will see their annual business rates bills rise by £31 million from next week

Last week we revealed how Chris Hayward, policy chairman of the City of London Corporation, the governing body for its finance district, said the income tax issue had been raised during a meeting with First Minister Humza Yousaf.

Now, Scotland’s retail sector is warning that shops’ annual business rates bills will rise by £31 million from next week, thanks to the largest yearly increase since 1999 at almost double the current rate of inflation.

Get our weekly opinion newsletter for expert analysis from The Scotsman’s team of columnists

This will mean steep increases for shops, pubs, restaurants, hotels, offices and industrial properties.

David Lonsdale, director of the Scottish Retail Consortium, says: “The sheer magnitude of this tax hike is starkly at odds with Scottish Government promises to ‘use business rates to boost business’.”

When confronted with bad economic news the standard response from SNP ministers is to complain that Holyrood does not possess the “economic levers” with which to turn the nation’s fortunes around.

Yet, in the wake of the Smith Commission following the 2014 independence referendum, the Scottish Government was handed powers over taxation.

And the evidence so far suggests that ministers have used these powers in a way that can only weaken the economy by disincentivising growth.

We may have the highest taxes in the UK, but we also have little, if anything, to show for it.