Hansard

I am so disappointed in Willie Rennie’s approach to the debate. I remember those heady days when Tavish Scott led the Liberal Democrats and Mike Rumbles went into the budget negotiation with John Swinney clutching a piece of paper demanding a 2 per cent cut in income tax. What a shame that, under Willie Rennie, the Liberal Democrats have lurched to the left and are now demanding an increase in tax instead of a cut, as Mr Rumbles demanded all those years ago.

The SNP’s plan seems to be to hit Scotland with a £1 billion surcharge on families and businesses, which will make Scotland the highest-taxed part of the United Kingdom over the next four years. Next year alone, the nationalists’ decisions will add an extra £212 million on to the country’s tax burden—a figure that will increase in every year until 2020-21.

As I have said, the UK Government is already on track to double the personal allowance for income tax, which will lift millions out of paying income tax altogether, and help the lowest-paid people. However, the SNP wants to see taxpayers in Scotland being hit with higher charges than exist in the rest of the United Kingdom. Because of the interaction with national insurance, the marginal rate on Scottish workers who earn just above the higher-rate threshold will become 52 per cent of their income, which will create a clear tax differential with the rest of the United Kingdom.

The SNP’s approach might have been understandable if the change in personal taxation were to raise hundreds of millions of pounds. However, in the first year of its operation, the likely maximum sum that will be raised is just £130 million. Is it really worth—for that sum of money—sending out the message that Scotland is an expensive place to live, work and do business in? Is it really worth making Scotland the highest-taxed part of the United Kingdom?

We have heard Scottish businesses’ concern that they will, in order to compensate for the higher tax rates, have to pay a Scottish supplement to attract the best talent. The same must surely apply in our public services. Already, the national health service in Scotland is in competition with the NHS down south for top consultants, and our universities are in competition with universities down south for top academics. What assessment has the Scottish Government made of the additional cost to the public sector from the tax rises? The reality is that they will raise very little money and are likely to do substantial damage to the economy.

It is not just on personal taxation that the SNP has got it wrong. Its doubling of the large business supplement applies to all properties that have a rateable value above £35,000, which means that many relatively modest retail premises will be affected. It is also having an impact on the economy. In September, 13 Scottish business leaders wrote to the finance secretary calling for the Scottish Government to level the playing field with England. It is no wonder that we have seen retail businesses such as McEwens of Perth and McAree Brothers in Stirling closing their doors, with the tax burden being a key factor.

What is so strange about the SNP’s approach to taxation is that it is such a departure from what we have heard from the party in the past. Members who were here in previous sessions will recall the then First Minister, Alex Salmond, lecturing us week after week on the benefits of the Laffer curve and telling us that cutting taxes would lead to higher tax revenues. For more than a decade, the Laffer curve was the central tenet of SNP economic theory, but now the SNP is reduced to the extent that we have a finance secretary who says that he has never even heard of the Laffer curve. Where was Derek Mackay when all the rest of us were sitting here being bored rigid by his former boss? Why was he not paying attention?

For years, the SNP told us that corporation tax should be cut in order to grow the economy and SNP members—including John Mason—stood on manifesto commitments to cut corporation tax. Furthermore, the only substantial tax change that was contained in the 2014 white paper “Scotland’s Future: Your Guide to an Independent Scotland” was a cut to corporation tax. We were told that that was the way to grow the economy and tax revenues. Now, the SNP has done a spectacular U-turn in its approach to taxation.

Bizarrely, the SNP is still committed to a tax cut. It wants to cut air passenger duty—a policy on which we are happy to work with the SNP in order to deliver it. However, the argument for cutting APD—that it will generate economic growth and tax revenues elsewhere in the economy—surely applies to other taxes. Why is the logic of that lost on the finance secretary?

Even the First Minister’s hand-picked chair of the SNP’s new growth commission—our erstwhile colleague in Parliament, Andrew Wilson—gets it. He understands that the way to increase tax revenue is to increase the number of high-earning taxpayers. It was Andrew Wilson who, at the weekend, cited the excellent example of the land and buildings transactions tax. When residential LBTT was introduced, it was supposed to be revenue neutral, but the tax take in the first year was £32 million lower than expected. Why? It was because the then Cabinet Secretary for Finance and Sustainable Growth, John Swinney, was too greedy. He hiked the rates at the upper end too much, which caused a slowdown in the market. As a result, the tax take was less than it should have been. Andrew Wilson, the SNP’s one-time economic spokesman, gets it and Alex Salmond, when he was First Minister, got it. Now, under Nicola Sturgeon, the SNP has lurched to the left and is determined to hike taxes on hard-working Scottish families and businesses. The result will not be higher tax revenues, but an underperforming Scottish economy and a shrinking tax base.