The idea that higher income tax will drive people out of Scotland doesn’t add up
There has been a great deal of hyperbole over the possible effects of a small rise in income tax, says Jenni Davidson
Income tax square on Monopoly board - Image credit: TaxRebate.org.uk via Flickr
There have been a number of scare stories around income tax over the last few weeks, some suggesting that ‘hard-pressed’ Scots will struggle to cope with tax rises and others predicting a mass exodus across the border to avoid paying more.
This follows the launch of a consultation paper at the beginning of this month on possible changes to income tax in Scotland, where Nicola Sturgeon suggested it was time for those that could afford it to pay a “modest amount more”.
It also comes after the National Audit Office calculated that nearly one in five taxpayers in Scotland – around half a million adults – is currently paying more income tax than those in the rest of the UK, rather than the one in seven calculated by the SNP.
- Proposals for ‘modest’ income tax rise likely to be included in next Scottish budget
- Scottish Greens push for progressive taxation
- Scottish and Welsh finance secretaries urge an end to austerity
- Nicola Sturgeon: Scotland needs to be more equal to be more productive
But should that really be a cause for hysteria?
The Audit Office figures show that those earning between £43,000 and £45,000 are paying an average of £213 more a year than those in the rest of the UK.
That’s £17.75 a month for those earning nearly twice the national median – hardly even worth paying an accountant to avoid.
And while three out of four possible models in the Scottish Government’s consultation document do show a rise for those earning above £24,000, it amounts to less than £20 a month for those earning less than £46,000, and much less for some, depending on the model adopted – hardly a fortune.
Certainly, a tax rise tests the idea that Scotland is a more fair and caring country than England by asking people to actually put their hands in their pockets to prove it – or at least let HMRC do so – but the idea that organisations will struggle to recruit seems overblown.
The reality is, people take into account a complex set of criteria, some financial, some not, when choosing where to live.
They consider not only where there is a job available that they want, at a salary that would be viable, but what house prices and commuting costs would be, where family or friends live, whether it would be a good place to bring up children, and simply whether they like a particular city, town or part of the country.
When I moved back to Scotland from the south of England two years ago, I took up a job paying slightly less. But it was worth it for a role I wanted.
Plus, I could cut out my three-hour a day round trip by train, saving a significant amount of money every month in the process, not to mention time and stress, and be closer to family.
And with property cheaper in Scotland than the south-east of England, I reckoned, rightly, that I’d probably be able to afford a better flat than the basement studio I was renting in Brighton.
Of course, if income tax is higher in Scotland, a few people may decide to live elsewhere.
But it’s hard to imagine that many will decide to up sticks and move, breaking links with friends and family, uprooting children who are in school, selling their house and finding a new job, or refuse to move here for a job they want, purely for the difference of a few hundred quid tax a year.
The idea that people will base their life decisions solely on income tax just doesn’t add up.
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