Scotland can raise the revenue we need, fairly and locally, to protect services
The ongoing contest for the “anti-austerity” crown in Scottish politics has reached a new intensity this week. Only the Tories aren’t in this game – even if some of the rest have a pretty weak hand to play.
But opposing austerity doesn’t just mean knowing who to blame. It means acting. Whatever view you take of the Scottish Government’s financial record to date, over the coming years it will be increasingly clear that public services will suffer hugely if budgets keep being squeezed.
To put it simply, in the face of UK cuts we can’t protect public services without raising our own revenue. Equally, we can’t achieve a more equal society without redistribution.
The question is how. The SNP tend to argue that the current income tax powers aren’t good enough, and that we must wait until we can raise the higher rates independently of the rest. However, they don’t yet have a clear proposal to do this – hopefully that will come during the election campaign.
This week there have been angry disagreements about whether Labour’s proposal for a 1p increase would be progressive. There is a case for saying no-one should have to pay more tax, but no-one who wants to avoid the cuts can make this case. There is also a case for saying any impact at all on below-average incomes is unacceptable, even if broader shoulders bear a bigger burden.
But another line I’ve seen, that people on high incomes would see their tax bill increase less than people on low incomes, is a nonsense. It’s only possible to reach that conclusion by looking at your tax increase as a percentage of your existing tax bill. But this is an income tax – the whole point is it’s proportionate to what you earn, not to what you paid before.
Raising revenue is clearly necessary to protect services. An increase in the Scottish rate of income tax would be one way of doing so. But is it the best way?
I’d say no, and that’s why the Greens this week voted against both Labour’s proposals and the SNP’s budget as it stands. Over recent years Scotland’s tax base has shifted ever further from local tax to centralised tax, and from a broad mix including property wealth towards ever greater reliance on income. Scotland’s wealth inequality goes even deeper than our income inequality, and would be far worse without property tax.
Over the coming weeks we’ll set out our election proposals, looking ahead to stronger tax powers at national level and a replacement for council tax. But the immediate situation is critical, and unless we want to see job losses in the public sector and the erosion of services we all rely on, changes to the budget are needed now.
That’s why we set out three proposals which can be used immediately to raise revenue, on a scale not far from what Labour propose, but in a very different way. Scottish Greens will keep the focus on local taxes, and on the role of property wealth in the system.
Whatever view you take of the council tax freeze, the SNP’s pledge was to continue it for the duration of the current Parliament. That period ends in March this year, before the new budget comes into effect. Their pledge has been delivered, and it’s time to allow local councils to make their own decisions, accountable to their voters, without the threat of huge financial penalties. When council tax had been rising rapidly for years there was a good case for a freeze – but not forever. Nearly 10 years on, it’s time for a thaw.
Secondly, we should make use of the council tax multiplier, which determines the difference between the bands. Council tax is still based on property valuations more than 20 years out of date, and luxury homes have increased dramatically in value since then. By using the multiplier, we could increase revenue from those properties without hitting people in ordinary homes.
Third, I moved amendments to the Land Reform Bill this week which would have brought derelict land into the valuation roll for non-domestic rates. Those who hold such land pay nothing at the moment, and instead of incentives to put it to good use there are perverse incentives to demolish property in order to escape taxation.
In opposing these amendments, the Scottish Government appeared to argue that it can already be done without the need to change the law – so let’s get on with it. Scotland’s estimated 11,000 hectares of derelict land could generate some £316 million each year for investing in social housing or other priorities.
Scotland can raise the revenue we need, fairly and locally, to protect services. Or we can hand on the UK’s cuts. But we can’t avoid that choice any longer.