Writing for The Scotsman, Scottish Conservatives Finance spokesman Murdo Fraser reacts to the 2017 Scottish budget.
Like children longing for Christmas, MSPs have been waiting patiently for the SNP to announce their changes to income tax and today we finally got a hold of their proposals.
To the sound of backbench cheers, Derek Mackay proudly claimed that Scotland was now the “fairest” taxed part of the UK. However, after the dust settled it became clear that this was a budget low on Christmas cheer and full of smoke and mirrors.
More Scrooge than Santa, Derek Mackay’s announcement confirmed that anyone in Scotland earning over £26,000 would be hit by higher taxes. Nurses and primary teachers are all to pay more under this Scottish Government.
The new 21p rate will apply to those earning between £24,000 and £44,000, and an estimated 1.16 million workers will be dragged into this new tax bracket. That’s nearly half of all workers in Scotland.
What’s more, this new “Nat” tax breaks a direct manifesto pledge to protect basic rate tax payers. In May 2016, 65 per cent of voters placed a cross in the box for parties opposed to further tax hikes, but their voices have been ignored by a Government that prefers to take direction from the high tax, low growth Green Party.
Higher rate tax payers will also be hit with a 1p tax hike. And whilst we all agree that the broadest shoulders should bear the biggest burden, this should only happen if tax revenues increase and so far evidence suggests otherwise.
Beyond the headline of a tax cut for lower earners, the reality is that the most anyone will save is a measly £20 a year – 38p a week, not enough even to buy a 2nd class stamp. Yet this is the generosity that we are expected to applaud.
A budget full of contradictions was complete when it came to local government funding. In one sentence, Mr Mackay, blasted the UK Government for increasing capital budgets at the expense of revenue spending, yet in the very next he did the same to local government.
Derek MacKay delivered a real terms cut to Council revenue funding, telling them to make up the difference by increasing Council Tax by 3 per cent. So any tax reductions will be more than offset by rises in Council Tax.
One glaring omission from today’s statement were figures on growth. But these were found in a document later circulated to MSPs and it became clear why they were trying to hide them. The Scottish economy is predicted to grow at less than 1 per cent for the next five years which will mean it has trailed UK growth for the last 14 years.
Large and small businesses across the country have called on the SNP to prioritise growth, but these figures suggest that this remains a distant prospect. Experts are agreed that the best way to increase public spending is through economic growth and increased employment. Unfortunately, like the “Laffer curve”, Mr Mackay must have missed that lecture.
We learnt two things from today’s budget: the SNP can’t be trusted to keep their promises, and a new hand is needed to steer the Scottish economy back to real growth and productivity. Only the Scottish Conservatives can be trusted to do that.