Is a Scottish tax rise – even by one penny – really going to make Labour popular again?

Kezia Dugdale with Labour leader Jeremy Corbyn [Image: Anthony Devlin/PA].

This is a tricky one.

Kezia Dugdale’s strategy – saying Scotland should use its new income tax powers to eliminate the effects of central government cuts on local councils – will certainly put the SNP on the spot.

The nationalists’ record on education is poor, and the promise to prioritise schools and colleges will put that record under the spotlight.

The SNP has not been kind to local councils, having kept budgets frozen since 2007. Nor has it been kind to the poor, with £1 billion of money granted to Scotland by Westminster for the relief of poverty being used to patch over the cuts in local authority budgets.

And the promise to grant a rebate to lower-earners suggests the SNP’s claim that Scotland’s new income tax powers aren’t flexible enough is just an excuse for refusing to take action.

But it is still an increase in income tax.

And the Liberal Democrats suggested it first.

But it is a start.

The Scottish government is coming under greater pressure to use Scotland’s new income tax powers after Labour proposed a 1p increase and combined with a system to give a rebate for low earners.

Kezia Dugdale, the Scottish Labour leader, has followed the Liberal Democrats in calling for income tax in Scotland to be raised immediately to help cushion local councils from more than £350m in cuts to frontline services.

The measures increase the prospects of tax and education spending becoming dominant issues in this May’s Scottish elections, with Labour and the Lib Dems pledging to prioritise schools and colleges when spending the amount that the tax increase will raise annually, projected to be £475m-520m.

Dugdale will dismiss claims by the Scottish National party’s John Swinney, the Scottish finance secretary, that the first set of new tax powers due in force on 1 April are too inflexible as they require Holyrood to raise or reduce every income tax band by the same margin.

Holyrood will only be allowed to adjust tax bands and rates separately from April 2017. But Dugdale will argue that low earners can be protected from paying more tax if there was an across-the-board increase and then £50m was spent each year on a £100 annual rebate for those earning less than £20,000 a year.

Source: Labour pushes 1p tax rise in Scotland | Politics | The Guardian

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9 thoughts on “Is a Scottish tax rise – even by one penny – really going to make Labour popular again?

  1. Terry Davies

    seems to me if the TORIES have 20% Labour 21% then if SNP introduce 19% as the basic tax rate they will gain the votes for scottish independence. !!!!

  2. Joan Edington

    The whole issue of local government funding in Scotland is easy for Labour to use the word “cuts” against the SNP. Things aren’t that simple.

    Although a quick glance at the figures makes it look like local government funding has been cut by 3% more than the Scottish Government funding since 2007, this as a false claim, since it doesn’t take into account the centralisation of the police and fire services (whether you agree with the policy or not is irrelevant). They are now funded out of Holyrood rather than their original local council budgets. Although it is true that Holyrood has lost less funding than local councils since 2007, the actual figure, taking police and fire service funding into account, is only 0.2% over the 8 or 9 years.

    On top of this, although the councils complain at not being allowed to raise council tax, Holyrood has paid them what they would have expected to have made through council tax rises (and more it is estimated) every year of the freeze. They have also paid any bedroom taxes, which frees up councils’ emergency funds and saves homelessness costs.

    Personally, I would be willing to pay an extra penny tax, as long as the trap hasn’t been set. The notion that neither Scotland or rUK should win or lose from any changes could well result in the block grant being reduced. I wouldn’t consider it fair if Scottish taxpayers paid up to improve our lot but then had it swiped by Westminster.

    1. Mike Sivier Post author

      Police and fire services were originally funded by councils in Scotland, were they? Read this and think again:
      In any case, I don’t see why you’re trying to drag the police into this. Police funding is separate from local authority funding and always has been.
      Your claim about Holyrood paying what they would have expected to make through council tax rises rings false. Holyrood might have paid what Holyrood expected them to have made, but that’s not the same. In any case, how much of this was financed by the central government grant that was intended to alleviate poverty?
      Payment of the Bedroom Tax by Holyrood is, again, neither here nor there. The SNP has used this to claim there is no Bedroom Tax in Scotland whereas, in fact, every single taxpayer north of the border pays the Bedroom Tax, whether they fall under its criteria or not – and none of them have been offered the choice of whether they want this to happen.
      Your comment about neither Scotland nor rUK winning (your word; a better one would be gaining) or losing from the change that allows Scotland to impose its own taxation proceeds from a false premise. The issue is whether they gain from the initial partition of tax funding. What Scotland does thereafter – in relation to taxes paid by its own citizens – is its own business.

      1. Joan Edington

        As shown in the link you gave me, I should have made it clearer that I wa referring to part of the police service that was funded by local government, rather than inferring it was all funding.

        “Police funding is separate from local authority funding and always has been”. Maybe in your part of the world but your own link says partially (around half) otherwise.

        The expected council tax rises were based on UK expected rises in RPI rather than a figure conjured up by the SNP.

        I agree with your point about the bedroom tax but I would expect that a good majority in Scotland would agree with it being punitive and be glad that at least we have the power to mitigate something foisted on us by the Tories. If a majority don’t agree, they know what to do in May.

        Your last comment is indeed true, which is why a settlement is proving so difficult.

      2. Mike Sivier Post author

        I would suggest that the part of the police service “funded by local government” is simply the police precept, paid as part of council tax but then handed on to the relevant local force.

      3. Mike Sivier Post author

        I think we’re at cross purposes now. Are we discussing the original way Scottish police were funded, or the way they are now?

      4. Joan Edington

        Both, rather the change. My point was that the cuts in funding to local councils have not been as high as they try to claim, since central government fund the police now, so that element of the general revenue grant is not required.

      5. Mike Sivier Post author

        And my point was that any money going to the police would have been accepted as such, by all parties, and would not be included in any claim about cuts to council funds. Even if they were paid at the same time, they were acknowledged as separate, in the same way as the police precept is separate from council tax here in Wales, even though they are paid together.

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