Sturgeon and Davidson make fools of themselves over Scottish Labour’s tax policy change
All smiles: Kezia Dugdale would put real change into the pockets of low-earning workers (apologies for the appalling wordplay – I couldn’t resist it).
Well done to Nicola Sturgeon and Ruth Davidson for making complete idiots of themselves and their parties.
They clamoured to score cheap points after Scottish Labour announced it no longer needed to offer a £100 rebate to protect low-paid workers from its own planned income tax increase of 1p on the basic rate.
The rebate was intended to make sure people on low wages would not have to pay any more income tax than they do currently – but an increase in the personal allowance (the amount each earner is allowed to keep before they start paying tax) means those people won’t be affected in any case.
So the rebate is no longer needed – as anyone can see.
Anyone, that is, except SNP leader Nicola Sturgeon and Scottish Conservative leader Ruth Davidson.
Labour’s political opponents immediately seized on the reversal, which SNP leader Nicola Sturgeon described as “outrageous”. She added: “Instead of getting £100, the low paid are now having their personal allowance increase taken away by Labour.”
No, they’re not. They won’t lose a penny.
Scottish Conservative leader Ruth Davidson said the move indicated that Labour’s policies were a “shambles”, adding: “We want workers to keep more of the money they earn, Labour wants to tax it right back off them.”
No, it doesn’t. Labour could not have known in advance what the Conservative chancellor, George Osborne, would announce in his budget, so the rebate announcement was necessary, at the time it was made. Now, it isn’t.
Of course, workers will keep more of the money they earn – that’s the whole point of Labour’s plan – and it won’t be taxed back off them by a Scottish Labour government.
Here’s a Labour spokesman’s explanation:
“Under our plans, those earning under £20,000 won’t pay a penny more than they pay today because of the recent changes being made to the personal allowance. Our decision to increase the top rate, and to maintain the threshold for higher rate tax payers as it is today, means the wealthiest will pay the most to stop the cuts.”
Ah. Labour’s plan means wealthy people pay more. Perhaps that’s why Ms Sturgeon and Ms Davidson are so vocal in their opposition.
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Current tax year
£19,999 salary -PA@£10600 leaves £9399 @20% for a tax bill of £1897
Next tax year
£19999 salary -PA @ £11k leaves £8999 @20% for a tax bill of £1799.80
Labour tax plan
£19999 salary -PA @ £11k leaves £8999 @21% for a tax bill of £1889.79
Whilst your argument is correct that Labours tax plan isn’t going to leave workers on under £20k worse off than they would be today it does make them worse off than they otherwise would be. So do Labours plans leave workers worse off?
No. It doesn’t make them worse off than they otherwise would be.
The Scottish Government will not be able to change the rate of Income Tax until April 2017, when the personal allowance will be £11,500. So the tax bill will be £1,699.80 – lower than both the figures you quote.
Okay so looking at those figures then
Tax year 2017
£19,999 salary -PA @11.5k = £8499 @ 20% for a tax bill of £1699
Labour tax plan 2017
£19,999 salary -PA @11.5k =£8499 @21% for a tax bill of £1784
Scottish Labour intend to take about £50-80 away from people earning under £20k, that is fact.
What we do with that fact; whether we accept that as necessary in order to maintain public services is another question. To use this as yet another attack on the SNP is just partisan nonsense.
No, because the 20 per cent tax rate on the lower personal allowance – even with the rise to £11,000 – means a tax bill of £1,799.80.
That is a fact, because you pointed it out yourself.
However you try to juggle it, the new personal allowance announced by George Osborne means that Kezia Dugdale is right and the rebate announced by Scottish Labour is no longer necessary.
Of course, your comment on what we do with your fact is utterly irrelevant as it isn’t a fact.
Another shot at Scottish politics ? At least we are moving towards a progressive system which is neither right or left wing. Have one look at the structure of our parliament vs Westminster to understand why we are still on track into a full devolved power. Westminster wont change, and the English wont accept we think our political system is more highly evolved than this false divide between mostly just labour and conservative. Its an addiction to old ways, yet all this old fashioned divide does is introduce constant instability into political systems, where as we would prefer something more like Northern Europe or some of the better developed EU states.
Sturgeon and Davidson are both right wing (although Sturgeon tries hard to deny it). How is that moving towards centrist politics?
There is no false divide between Labour and Conservative – they’re not the same at all (not even similar any more). How is a political system in which one party (the SNP) has power all the time any different from your claimed “false divide” anyway? If it was a “false divide”, how would it put “constant instability” into the system – it would stay the same.
Make no mistake: The current Scottish Parliament is not at all like northern Europe or the developed EU states.
Because nearly every Scottish constituency voted for a non left or right wing party called SNP. That pretty much sums up that we are not that interested in a division between left or right wing politics. A division occurs when the population splits off into left or right wing then moves there and in these zones people do not identify with people in the other zone. They then become idealogically opposed i.e. As occurs in England. As a result the political systems is unstable because successive governments keep trying to undo the previous work of the last government. The country can never settle down into a feeling of unified politics, but over time thinks this is normal and a wonderful prize of democracy. Its not its dysfunctional.
The SNP is not “non left or right wing” – it pretends to be left wing but is in fact right wing.
People need to judge SNP members by what they do, not what they – or you – say.
I’m not a great mathematician but I don’t see how those earming less than £20,000 will not be a penny worse off than they would be without the extra 1p tax. They might not all be a penny worse off than they are now but they will lose the advantage of the personal allowance rise.
Earning £15,000 say.
Currently pay £880 tax (on taxable £4,400)
Take home £14,120.
After April, without 1p tax hike, pay £840 tax (on taxable £4,200)
Take home £14,160.
After April, with 1p tax hike, pay £882 tax (on taxable £4,200)
Take home £14,118.
At £15,000 they will be £42 worse off and by the time they are on £20,000 they will be £92 worse off. In fact the only people who would not be worse off are those whose pay is under £10,600. By worse off, I mean worse off than without the extra 1p.
Take home £14,120.
After April, without 1p tax hike, pay £840 tax (on taxable £4,200)
Take home £14,160.
After April, with 1p tax hike, pay £882 tax (on taxable £4,200)
Take home £14,118.
At £15,000 they will be £42 worse off and by the time they are on £20,000 they will be £92 worse off. In fact the only people who would not be worse off are those whose pay is under £10,600. By worse off, I mean worse off than without the extra 1p.
Nobody will be worse off, and it is ridiculous to make such a claim.
Nobody has had a cut of 1p in their tax rate.
Many people will have an increase in their personal tax allowance – it will be £11,500 by April 2017.
They will be better off.
Scottish Labour has made a decision that those whose incomes needed to be protected will be.
It’s as simple as that.
Sturgeon and Davidson are arguing about something that never happened. As I said originally, nobody is going to be worse off.
I don’t know why you mention a cut of 1p in the tax rate. I never mentioned it and I am not aware of anyone else doing so either.
As I have said, when I refer to worse off, I am referring to worse off after the new personal allowance takes effect, not to current take-home pay.
As you have at least realised yourself, Scotland has no right to change the tax bands/rates for another year. After that, Labour could do whatever they want but, for this year they cannot.
I know Kezia would like to be in power this next tax year but that is unlikely. If she was and added the 1p to the Scottish tax, everyone who is paid over £10,800 would be paid less this coming tax year than if that 1p wasn’t added. This would be true even with a personal allowance of £11,500, unless the tax band was changed to have a zero rate up to £20,000 in future tax years.
I think you were confusing me. For clarity, we’re discussing whether low-paid Scots will will be worse off in the 2017-18 tax year after Labour withdrew its plan to give them a £100 rebate to compensate them for a planned increase in the basic rate of income tax by 1p. The plan became unnecessary because George Osborne announced an increase in the personal tax allowance.
What you wrote didn’t make immediate sense to me and I was trying to sort it out in my reply. What you have written now doesn’t make much sense either.
In any case, as you have seen in my reply to Gavin Proctor, people who are paid less than £20,000 will be better off under Labour’s plans.
Now we’re confusing each other. I have not been really considering the 2017/2018 tax yrear and onwards since, by then, whichever government is in power will have the ability to change tax bands and the £100 Kezia was originally offering would not be necessary in any case. If in power, she could simply change the bands to say under £20,000 would be zero-rated on the SIT half.
The £100 that was offered was to help in the 2016/2017 year where Scotland is being forced to make any change to SIT across the board of current bands. If 1p is added to the SIT rate for basic rate earners it must be added to everyone. The idea of the rebate was to alleviate that for low earners, this year.
Our definition of worse off has been different too. I was comparing earnings this coming year with 1p added to the same earnings without 1p added. It is obvious everyone would be worse off if taxed higher. The increase in personal allowance is an irrelevance in that case since it would apply whether or not the 1p was added.
I’m not sure what you are comparing for this year. You seem to only be talking about the future when the £100 would be unnecessary anyway.
You ARE confused.
This issue was always about the 2017-18 tax year onwards. That’s the first opportunity any party in the Scottish Parliament will be able to change tax at all.
The £100 Kezia Dugdale was offering would have been necessary to mitigate her one per cent Income Tax increase at that time – but only if George Osborne had not announced an increase in the personal tax allowance to £11,500 at that time. His decision makes the £100 gift unnecessary.
No, she wouldn’t have said earnings less than £20,000 would be zero-rated on the Scottish half, because that would not produce the same effect.
Also, of course, changes in the 2016-17 tax year would take effect this week. I think the new tax year starts on Wednesday. Scottish Labour are not in office in the Scottish Parliament so of course, Ms Dugdale wasn’t discussing plans for that year.
As the figures that have already been produced show – conclusively – Scottish Labour’s plans mean the people Ms Dugdale wanted to protect will be better-off in either situation.
I’m afraid not Mike. I’m not sure what your source of information was but it is currently incorrect. It may have been correct at one time. The following is taken from a recent BBC interview.
“Scottish Labour said the payment of £100 was intended to be for one year to ensure that those earning under £20,000 would not pay more tax.
A spokesman insisted: “We always said this was for 2016/17 only””.
As a correction to my previous post though, I should have said leaving those earning up to £20,000 at the 20% rate. She certainly would not lower the rate to zero.
I think the report, or the spokesman, is mistaken. Why introduce a rebate to compensate for an increased rate at a time when you can’t actually increase the rate? That doesn’t make sense.
Scotland does have the power to change the rates this year. What they don’t have until next year is the ability to vary the bands. As I said in my last post, if they raised the basic rate by 1p it would have to be across the board, thereby affecting tax-payers below £20,000 income. The £100 rebate was to avoid that in this first year. After that they are allowed to change the bands and could have a 20p and a 21p band, spllit at £20,000.
As for their spokesperson, who knows? Dugdale is getting so confused and u-turning about so much that there is serious speculation that she won’t be leader after the election, if not before. Ian Murray is being used more and more as the face of Labour up here, even though he is the MP. Kezia even came out this week and said it was conceivable that she would support independence, which hasn’t helped her in the credibility stakes. Labour made a serious mistake choosing her as leader, as they did previously with Jim Murphy.
From the Independent’s report that forms the basis of the article:
Next year being 2017, of course.
As for the spokesperson, you’re right to say “who knows?” but wrong to suggest the fault lies with Ms Dugdale. Clearly the spokesperson made the mistake.
Readers can draw their own conclusions about why you wrote that, based on the remainder of your comment.
The Independant article is wrong Mike. Scotland has had the ability to change tax rates by 3p up or down since 1999. As I said before, it is only the banding that we can’t control until next year.
I should have said they would lose “some of” the advantage of the advantage of the personal allowance rise.
Nobody is going to be worse off, Joan.
Oops. Posting too quickly. Although my reasoning is still true, I believe, in fact the amounts worse off should in fact be half the amount stated. I hadn’t taken into account that Scotland only gets to change the tax rate on half the tax. We have no control of the personal allowance.
Nobody’s going to be worse off, Joan.
I think there are some crossed wires here, are you arguing that Scottish taxpayers aren’t losing out when you compare 2018 at pre-budget Tax Allowance change at 20% for a £1799 tax bill to post tax allowance change at 21% for a tax bill at £1784?
I don’t think there are any crossed wires at all. The evidence has been presented for all to see.