Meeting of the Parliament 20 February 2018
I am sure that that outcome will give great reassurance to the many people who are concerned about such issues—not least the many charities in Scotland that rely on gift aid income. However, would it not be better if, before he announced such changes, the cabinet secretary sought agreement with the UK Treasury? If he asked us to wait, when he announced them he could give that reassurance to people at that time.
Apart from questions of process, what worries us about the tax rises is the impact on Scotland’s economy. Just last week, the Scottish Retail Consortium warned about their likely impact on economic growth. The Scottish retail sales monitor for January 2018 showed that Scottish sales fell by 0.7 per cent on a like-for-like basis compared with the figures for January 2017. At that time, the SRC expressed its concern about income tax and council tax rises and the consequences for consumer spending. Those concerns were backed by the Scottish Chambers of Commerce, which said that it had
“warned repeatedly about the threat of Scotland being perceived as a relatively high-tax economy, and how that impacts on business investment and on consumer behaviour. We will be watching shoppers’ behaviour closely in the months ahead for signs of restricted consumer spending and tightening disposable income”.
Such messages are stark. The cabinet secretary tries to dismiss those who raise concerns about the impact of higher taxes, but here is what every business organisation in Scotland is telling us. Inflation is going up, and food and fuel prices are rising. Council taxes are expected to go up across Scotland by 3 per cent in April. Wages are not increasing fast and, on top of that, an additional income tax burden is being imposed by the Scottish Government on 45 per cent of Scottish taxpayers—a clear breach of the promise that it made in its election manifesto in 2016.
Our view is that the Scottish Government needs to start listening to all those voices that are expressing concern. Every economic forecast has the Scottish economy growing at a fraction of even the UK average in the coming years. That was the stark message from the Scottish Fiscal Commission’s projections, which were published at the time of the budget, and it is being repeated by other economic forecasters. We know that, if the Scottish economy were to grow at even the UK average for the period from 2007 to 2022, over that 15-year period that growth would be worth an additional £16.5 billion in cash terms to the Scottish economy. That £16.5 billion will be lost—it is the price of our failure to match the performance of the UK economy as a whole.
Just think what a faster-growing economy could contribute towards expanding our tax base and providing more cash for our public services. It would avoid the need for the tax rises that we are talking about today. Yet, rather than focus on initiatives to grow the economy, the SNP is determined to increase the tax burden and send out a message that Scotland is the highest-taxed part of the UK.
Today’s increase in income tax in this rate resolution penalises hard-working families. It breaks a promise that was made by the SNP in 2016 and that has been repeated more than 50 times since. In making Scotland the highest-taxed part of the UK, it will condemn us to years of sluggish economic growth and deprive us of much-needed tax revenue as a result. For all those reasons, Parliament should reject the rate resolution that is before us.
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