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by Henry McLeish
17 March 2016
Political parties need to start talking about priorities when it comes to tax

Political parties need to start talking about priorities when it comes to tax

For the first time in nearly a decade, the ‘tax agenda’ is opening up the political debate in Scotland. This means the SNP will be put under pressure to reveal in more detail their thinking on tax and their spending priorities for the next five years.

The tax changes recently announced by the First Minister are important but leave many questions unanswered about the future direction of SNP tax and spend policy, the inherent contradictions within their brand of ‘political populism’, and whether the long-term coalition they have constructed to achieve independence can survive their more recent conversion to social justice and tackling inequality.

No one should be in any doubt about the political and practical difficulties of discussing tax. Since parliament’s inception in 1999, there has been no debate on tax, partly because there was no significant transfer of powers on this subject.

In the absence of any serious discussion about the future of local government finance, there was little interest or enthusiasm in creating any Scotland-wide discussion. This is no longer the case.

Scotland needs a debate not only about taxes but about the philosophy behind decisions made and the spending priorities they support. This is where the opposition parties can open up a much sharper critique of the SNP and use the opportunity to argue, on the basis of party policy and philosophy, different visions and priorities for the future of Scotland.

Over the next few years we will see the scrapping of the council tax freeze after nine years in which the tax has been regressive, wasteful and undermining of local democracy.

The recently announced government changes to the council tax are generating a new debate and rightly attracting much criticism from council leaders. The new devolved income tax powers will give a greater element of responsibility to the parliament and force the SNP Government to be much more transparent about their intentions, priorities and spending commitments.

Equally important, this will reveal winners and losers and to what extent the Government is serious about the redistribution of resources to tackle some of Scotland’s deepening social, economic, health and education inequalities. Put simply, who benefits from an SNP government? This will provide a much better and more informed platform for discussing the merits of ‘populism’ versus ‘progressivism’. But it is up to the opposition parties to define what they stand for.

Devolution was an opportunity to be different and radical, but this has been hard to achieve in certain policy areas. Local government finance seemed an obvious candidate. But in some senses, we have gone back. Maybe the Commission on Local Tax Reform report will point us in a new direction but the political parties have to be more consensual and find an alternative to the excesses and inadequacies of the present council tax.

If the much discussed, albeit some years ago, local income tax is to be abandoned, then a fairer and more progressive way of financing local government has to be found. There is also the absurd situation, highlighted by Professor Richard Kerley of Queen Margaret University, of tax bands agreed in 1991 – 25 years ago – being used in 2016.

A full revaluation of council tax bands based on true property values has to be a priority. This will be difficult. There will be winners and losers, but this is where fairness demands a better balance between basic needs and the broadest backs, the rich and poor, and ensuring adequate levels of finance for local council services. 

Without any codified or written constitution in Scotland or the UK, local government will always be completely at the mercy of central government.

But in today’s Scotland, the degree of central control, direction and funding is excessive and raises doubts about the independence of local councils. Over 85 per cent of council funding comes directly from central government and alongside the centralising tendencies of the SNP Government, there is much cause for concern.

 Is local government being turned into an arm of central government with localism, local democracy and local accountability being trampled on? Maybe there are some groups and political parties who see nothing wrong in this. Either way, we need a debate.

Hopefully, this new interest in tax will lead to a more philosophical and party political debate on ‘who gets what’ from an SNP government and the question of how spending impacts on reducing poverty, encouraging social mobility, and tackling the massive inequalities in wealth, income and opportunities that are all too evident in our 80/20 per cent society.

There seems to be a growing consensus in Scotland that in terms of health and education, we need to be doing a great deal better in enhancing life chances. Is populism now facing its toughest time? 

Can the tax debate open up deeper thinking about Scotland and the direction in which we are heading? The political parties should now be ready to talk priorities.

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