Are tax rises a price worth paying for improved public services?

With both the UK and Scottish budgets in mind, for The Huddle we asked our panel of experts for their take on the deceptively simple question: Are tax rises a price worth paying for improved public services? 

Anna Fowlie, chief executive, SCVO

Yes and no. Taxation must feel fair. Too many people expect Scandinavian public services for American taxes, but that doesn’t add up. We all as individuals should pay tax proportionate to our earnings, but big organisations must pay their share too. And we must recognise that not all public services are delivered by the public sector, many vital and expert services are delivered by charities and community organisations who need to be properly recompensed from the public purse. 

And public services must be fit for purpose. The current mantra of constantly demanding efficiencies of existing systems is exhausted and doesn’t work. We can’t just keep pouring more money into failing systems, we have to refocus public spending onto prevention and genuinely work collectively to make sure that not only are people able to live their lives well and communities are able to thrive, but the money that’s raised through taxation gets the best possible return for our investment. 

Neil Findlay, former MSP, director of social enterprise Unity Consulting

A health and social care crisis, rising homelessness, a drugs deaths catastrophe, life expectancy falling, one million Scots food-insecure, prisons bursting at the seams, fire stations threatened with closure – this is Scotland in 2025. The public services that are the glue that holds society together are being picked apart, cut by cut by cut, as the cost-of-living crisis plunges more families into financial crisis. At the same time UK billionaires saw their collective wealth increase last year by £35m a day to £182bn. The 50 richest families in the UK hold more combined wealth than the bottom 50 per cent of the population, hoarding over £750bn. 

The case for higher tax rates on the richest people with all this hoarded wealth is self-evident. Taxation is the price we pay for a civilised society: let’s tax wealth appropriately and rebuild the decent society. 

John Dickie, director, Child Poverty Action Group (CPag) in Scotland 

Yes. Abolishing the two-child limit was absolutely the right thing to do. It immediately lifts 350,000 children out of poverty, 20,000 of them here in Scotland. In a country as wealthy as the UK it would be utterly incomprehensible for a responsible government not to have acted. 60 per cent of these children are in working families, others have parents whose ability to work is constrained by disability, ill health and bereavement. These parents pay taxes but now need support with the costs of bringing up the next generation. It is in our interests to pay what’s needed to ensure we have the public services and social security that protect us all when unexpected economic and health shocks hit. Tax is vital for investing in children, and we should all be proud to pay our fair share – for our children’s sake and for the long-term economic security of our country.

Claire Telfer, Head of Scotland at Save the Children UK

Things are tough for families in Scotland. A combination of high costs, low-paid and insecure work, and insufficient social security and public services means that too many families just can’t make ends meet. Heartbreaking evidence of this is that one in four young lives is being held back by poverty. Experiencing poverty as a child can lead to poorer future outcomes in educational attainment, employment, and physical and mental health. Poverty is holding back our next generation, and that means it’s holding back our shared future as a country. Investing in children through social security and in public services like family support and childcare is an investment in childhoods today, and in a brighter, more prosperous Scotland for tomorrow. It’s an investment we can’t afford not to make.

Derek Mitchell, CEO, Citizens Advice Scotland

In the lead-up – and the ongoing fallout – to the Budget, we heard a lot about difficult choices, right? But be in no doubt – the people facing the toughest of decisions, the hardest of choices, are those walking through the doors of Citizens Advice Bureaux every day.

After more than a decade of austerity and perma-crisis, the local CAB is so often the last refuge for people facing unthinkable harm. People who are out of options after rebounding around broken public services and closed doors. There is no let-up or respite; no straightforward open and shut cases. Increasingly, our advisers are the backstop for failure in every part of the system, from social security inadequacy to the housing emergency.

So, if improving failing and dysfunctional public services mean tax rises for those who can shoulder that, the real question becomes whether we can afford not to.

Benjamin Elks, grassroots development manager, TaxPayers’ Alliance

No. Taxpayers have spent years paying more and getting less. From Westminster to Holyrood, politicians of all stripes have hiked taxes, insisting that everyone paying a bit more will solve all our ills. With the tax burden set to hit a record high in April, hard-working families are already paying too much. Bins go uncollected and potholes unfilled. Learner drivers wait months for a test. Patients languish on waiting lists for treatment. The police fail to investigate crimes. More spending is not the answer.

Public services need fundamental, root and branch reform. The state does too much and often does it badly, with taxpayers’ cash wasted on a bloated bureaucracy and pointless pet-projects.

We need a slimmed down state that focuses on providing core services efficiently. Waste must be cut and those spending taxpayers’ money held properly to account. Do that, and we can finally give taxpayers what they actually need: better services and lower taxes.

Peter Kelly, chief executive, The Poverty Alliance

It is uncontroversial and self-evident, I believe, to say that we all rely on good public services. Whether parents packing kids off to school, businesses moving goods around the country, or all of us maintaining our health, quality services are essential. And if we are to deliver on our shared ambitions for our country – reducing child poverty, increasing educational attainment, tackling our wide health inequalities – then we need to raise resources to fund these services. 

Tax is vital tool in reaching these goals. But precisely how we use tax is the crucial question. We are a wealthy country, and how that wealth is taxed must move to the centre of debates about taxation. Frustratingly, the recent UK Budget once again focused largely on the taxation of income. There needs to be a greater emphasis on the taxation of wealth, and in Scotland finally reforming council tax would be a great contribution to that debate.

Professor James Mitchell, Professor of public policy, University of Edinburgh

You get what you pay for. This is true for public services as much as anything else. There are, of course, other considerations. Are taxes being used appropriately and effectively? How should taxes be levied? What are the economic consequences of higher taxes? And is there an acceptable alternative to increasing taxes?

These questions must be included in any serious debate on whether taxes should rise. But fundamentally services that are taken for granted too often – emergency services, social care, schools, hospitals, bin collections to name a tiny few – have to be paid for. When demand for public services increases, creating a worrying dependency ratio (between non-working-age population and working-age population), then something must give. Growing the economy is an essential part of the response but tax increases may be unavoidable and should not be ruled out. Alternatives must be spelled out – savings, reduced or cut services.

George Thorley, former council chief executive, Mercat Group

We do not live in a country plagued by disease, warfare or tyranny, in fact quite the opposite. Scotland is by any measure a wealthy nation with a proud heritage that has generated a reputation that people care for each other – for example, the willingness of Scots to consistently donate to food banks.

However, the existence of food banks in Scotland is shocking. Their growth over the last decade to help individuals and families face-off hunger must be seen for what it is – a national failure.
Estimates suggest that there are 1.2 million people in Scotland experiencing “food insecurity”. We know that the source of this problem is the inadequacy of family incomes.

That’s why scrapping the two-child benefit cap is a welcome step. It will immediately increase family income by £68 per child, per month and help reduce dependency on food banks. If paying a little more in tax helps rebalance such inequity, then it must surely get public support.

Jamie Livingstone, Head, Oxfam Scotland 

Absolutely, but tax fairness really matters too. Right now, people across Scotland are seeing local services vanish, public services – like the NHS – struggling, and folk trapped in poverty. Yet they know that wealth at the top is soaring.

We must see tax, when revenues are spent wisely, as an investment in a fairer and greener Scotland, healthier lives, and care and support when we need it most. It’s also a down-payment on a healthy, inclusive economy. 

But it’s not just about how much tax is raised, it’s about who pays. Our tax system favours the very richest. The UK Government should do much more to make wealthier households pay a fairer share. In Scotland, we must better tax property wealth by replacing the outdated, unfair council tax and tax luxury pollution through a private jet tax. Public support is strong for the wealthiest paying more: what’s missing is political courage.