In all my years in the Scottish Parliament, I have not witnessed such universal criticism of a Scottish Government Budget. Almost on a daily basis, stakeholders – particularly those in business and local government – have been lining up to criticise the Scottish Government’s Budget choices. So too, have several key figures inside the ranks of the SNP and then there are the unanimous conclusions of Holyrood’s Finance and Public Administration Committee which argue that the Budget does not sufficiently address the Scottish Government’s own priorities of economic growth, tackling poverty and supporting public services.
But perhaps most uncomfortable of all for Humza Yousaf and Shona Robison, is the intervention of former Finance Secretary, Kate Forbes, who has been highly critical of the Scottish Government’s income tax policy claiming the tax hikes contained within the Budget were “counterproductive”. She rightly said that the changes would not bring in the revenue we need because of impending behavioural changes.
And here is why. The Scottish Fiscal Commission has already estimated that the advanced rate and increasing the top rate of tax will only generate an expected £82m after factoring in behavioural changes, £188m less than what could have been expected. This is because the tax burden in Scotland is already too high; people are finding ways of evading it by methods such as increasing contributions into pension schemes, cutting working hours or even thinking about moving away from Scotland altogether. It would be a disaster if that happened such is the need for home based talent. The Scottish Retail Consortium is just one business group that has already warned that businesses may seek to relocate their highest paid roles outside of Scotland which would reduce the number of highly paid jobs, reduce the number of individuals in these tax bands and undermine productivity.
Kate Forbes is only echoing the concerns of almost every business across Scotland correct, and the 40% of Scots who, in a recent poll, expressed concern about taxation policy. Scotland is already the highest taxed part of the UK which is causing ongoing implications for recruitment, retention and economic growth. Those earning over £28,850 are paying more than their counterparts in England and Wales. But it is not only the principle of paying more tax that has caused the outrage among working Scots; the main issue is that their higher tax burden is not reflecting better public services. Whether it is health, education transport, policing, housing, or local government, all we are seeing are sustained cuts alongside eye-watering levels of wastage by SNP economic mismanagement.
The SNP need to fill the gaping £1.5bn fiscal black whole one way or another, but increasing taxes is not the way forward. This is why I will present alternative choices in the Budget process due to end on 27th February.
The Scottish Government claims it has reset its relationship with business. So far, there is no sign of that and no sign that Ministers understand that those countries with lower taxes have better economic growth.
