3x1 Blog

Campbell Gunn

Tax returns to the front page

15 December 2017

Exactly 70 years ago, Labour Chancellor Hugh Dalton was forced to resign, after some details of his Budget were published in an evening newspaper a few minutes before his speech. Mr Dalton had briefed a journalist on his plans as he was going into the chamber.

These are changed days. Last month, most of Chancellor Philip Hammond’s Westminster Budget appeared in the Sunday newspapers before his speech, with the remainder of the details leaked on TV, radio, and in the daily papers over the following days.

It was a similar story this week with Holyrood Finance Secretary Derek Mackay’s Scottish Budget. It contained few measures which had not been well-trailed in the previous days’ media.

Most attention has focused on the SNP Government’s changes to income tax. For the Conservatives, the increases were too much. For Labour, the Greens, and the Liberal Democrats, they did not go far enough.

Broadly, “higher” and “top” wage earners will see a 1p increase to 41p and 46p respectively. The basic rate has been frozen at 20p, but a new intermediate rate for those earning over £24,000 will see them pay 1p more at 21p. However, this is being mitigated by a new “starter” rate of 19p for the first £2000 of taxable income.

The result, Mr Mackay claims, is that no-one earning less than £33,000 – 70% of Scottish taxpayers – will pay any more in tax than they do at present, and most of them will pay slightly less. Of course, that allows Opposition politicians, in particular the Conservatives, to point out that this means 30% of Scots will pay more tax thanks to the changes.

Broadly however, the poorest earners will pay less than their counterparts in the rest of the UK, while those who earn most will pay more than south of the Border.

The SNP Government estimates the changes will result in an addition £164 million in revenue. In the great scheme of things this is a marginal sum, for which the SNP are likely to receive heavy criticism in the media.

So, is it really worth all the political trouble it will cost them? First Minister Nicola Sturgeon says the additional cash will be used to mitigate UK budget cuts, and protect vital services, though what impact this will have on the day-to-day lives of ordinary Scots remains to be seen.

Now the Government – and remember, it’s a minority administration – has to get these finance plans through Parliament. The final Budget vote won’t be taken until late February, so there may still be some horse trading around the edges of the current proposals. But it will be a surprise if the Greens aren’t offered something to win over their votes. And that would be sufficient to see Mr Mackay’s Budget pass into law.

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