Let's use our income tax powers creatively and fairly

In March 2016, in the run-up to the first Holyrood election where serious income tax powers were on the table, I joined colleagues in a community centre in Edinburgh to launch the Green tax plan. We chose the venue because it was one of many local facilities that build quality of life in communities, but which have seen funding cuts since the UK’s austerity programme began.
Since devolution began Scotland has always had the ability, in theory, to protect our public services by operating different tax policies. But the political deadlock on replacing Council Tax with something fairer has prevented progress. 2016 was the first time people could elect a Scottish Parliament with the power to change national income tax.
We believed that bold action was needed, and we didn’t shy away from the challenge. We proposed a wider range of rates and bands, so that low earners could be protected and inequality could be reduced, while the total revenue was raised. We were the only party to do this; the Conservatives wanted to follow in lock-step with UK tax cuts for the wealthiest, the SNP wanted almost zero change with only a modest tax cut for higher earners, while Labour and the LibDems wanted to increase the basic rate, hitting low earners in the pockets.
We were also the only party to produce a calculation about the effect our tax plan would have on cutting inequality, and we designed our proposals to maximise this effect.
Now, just over a year and a half later, there’s a range of options on the table in the Scottish Government’s “discussion paper” on tax. But almost all of them have something familiar in common: a wider range of rates and bands which raise revenue, protect low earners, and reduce inequality.
It’s taken two years since we first began developing our tax proposals, but it’s now clear that the “no change” option is dead, and the idea of raising taxes on low earners is also off the table. This is huge progress for Scotland, and offers the chance to invest in urgent priorities like local services, a public sector pay increase and the low-carbon infrastructure our country needs, while also ensuring that income is shared more fairly between our citizens.
There are those who still resist, and it’s dismaying to see a small number of independence supporters ending up on the same side of the debate as the Tories who’re undermining Scotland’s political progress. Only with independence, they argue, can we have the full range of tax options; until we can do everything, we should do nothing. This is a counsel of despair, and would strengthen the hand of Ruth Davidson’s party who want Scotland to have powers on paper only, but never to have the confidence to use them.
I’m delighted that both the SNP leadership and many in the Labour party are now open to our bold approach to tax policy, and are seeing the potential for Scotland to take its own path toward a fairer economy and a society that invests in its people. It now seems quite possible that we’ll see a budget proposed this year that takes the first meaningful steps in that direction, and the positive, constructive influence of Green ideas has helped reach that point.
Of course even if that happens, and low paid workers enjoy protection from higher taxes while people like MSPs cough up a bit more, there will still be a lot of work to do on the tax reform agenda. A large part of the Green tax plan in 2016 relied upon reforming local tax too, widening the tax base and giving real flexibility to our councils about how they pay for the services their residents need.
Local taxation has always been fully devolved. If the Scottish Parliament had wanted to, it could have scrapped the unfair Council Tax back in 1999, and legislated for new forms of tax to fund local services. We’re likely to still be seeing Council Tax bills sent out two decades later, based on antique valuations and under the constraint of national rate-capping. This is an area where Holyrood as a whole has failed repeatedly, regardless of which party has been in power.
Local tax reform has the potential to respond properly to local economic circumstances, as the same approach isn’t likely to be right for a city like Glasgow and for small towns or rural areas. It could also be used to address the inequality of wealth, as opposed to income, which runs so deep in our society, addressing the problems of land ownership and housing costs.
So let’s get a budget passed which uses our income tax powers creatively and fairly, and then let’s get back to that unfinished business, and build a local system that’s fit for the 21st century.
This article first appeared in the National