The only government in tune with public, economist and market opinion is the Scottish Government



Nicola Sturgeon – hold fast. Last week the First Minister described Kwasi Kwarteng’s decision to abolish the 45p top rate of income tax as “moral bankruptcy” – suggesting her government won’t pass that tax cut on.

So, folk earning £150k in Scotland will soon pay a top rate of 48 per cent tax, compared to 42 per cent in England (including other tax changes), prompting weekend tabloid talk of a “tax chasm” and dire warnings by former Holyrood advisers about high earners and wealth creators fleeing to England unless the SNP matches Westminster tax cuts. Prof John Kay says top earners account for around 16% of Scottish income tax, so their loss would indeed cause a serious hole in public finances – if paying marginally more tax during a cost-of-living crisis prompts them to embark on the major disruption of moving home.

Will it? One professional tweeted “I’m happy to pay more tax in Scotland – my 3 children all graduated from Scottish universities with no tuition fees saving £108,000. As a family we also benefit from free prescriptions as well as more doctors, nurses, teachers & police officers per head of population.” Not to mention free personal care and bus travel for the old and young.

Scots inhabit a welfare state – despite the best efforts of the Westminster Government – which invests in wellbeing to maintain the country’s social fabric. Like most of our successful European neighbours. The widespread nature of SNP support suggests this platform chimes pretty strongly with voters – in housing estates and leafy suburbs.

So, should the First Minister knuckle down, swallow her principles, ignore her instincts, dismiss the emphatic and oft-repeated mandate given to the SNP for a progressive tax system in Scotland and meekly follow the Chancellor’s lead on top earner tax cuts?

Should she heck. Not just because Scots (and progressive Brits) probably applauded Nicola Sturgeon’s description of Kwarteng’s top rate tax decision as moral bankruptcy. Not just because sane economists agree his tax package will help the wealthiest 1%, encourage a free-for-all in the City when the cap on bankers’ bonuses is scrapped, hammer the pound’s value and thus hike public borrowing by fuelling inflation.

And not even because the uber-cautious Keir Starmer actually backs the Scottish Government’s stance. The Labour leader told Laura Kuenssberg’s Sunday Show he would reverse the 45p tax cut if Labour wins the next election. Whaur’s yer stooshie now?

But there’s an important difference between Sturgeon and Starmer. One – as party leader – is talking a good game. The other – as First Minister – is already playing it. Currently, the ONLY government in tune with public, economic and market opinion on the pointlessness of fat cat tax cuts, is the Scottish Government. Yet that reality is hardly audible or visible as wall-to-wall analysis by right-wing ‘thinkers’ fills the airwaves again as if the Tory leadership contest had never ended and entrenches a fringe, neo-liberal Tory outlook as the ‘new normal’ – in which mainstream progressive thinking is just a feeble-minded, happy-clappy deviation.

By any measure of expert opinion, Kwasi Kwarteng and Liz Truss are the outliers. But switch on the news – if you dare – and it doesn’t feel that way. The case for progressive taxation and a different kind of economy urgently needs a thorough public airing on TV by a credible, articulate Social Democrat. And the only candidate for the job is Nicola Sturgeon.

Sir Keir Starmer will doubtless use the Labour Party conference to clobber this ‘new’ Conservative Government whose incompatible agenda of high public spending and tax-cutting has so completely spooked the markets – even if a handful did make a fortune by betting the ‘mini-budget’ would prompt a collapse in the value of sterling.

But how far will Starmer go to rekindle faith in public spending, how convincing in dismantling claims for ‘trickle-down’ economics, when his top priority is persuading ex-Tory voters that Labour is now sufficiently patriotic, monarchist and ‘sensible’ to merit a second chance?

Welsh FM Mark Drakeford also attacked the top tax changes as likely to “embed unfairness across the UK.” But the Senedd has to use the UK Treasury’s income tax rates and bands, which means the 45p top rate will soon be scrapped in Wales – prompting speculation that the Labour-led government will soon campaign for the same tax powers as Scotland. Which – by the way – already has an intermediate band that matches the UK chancellor’s new income tax starter rate of £14,732.

In short, Scotland is currently walking the walk on progressive taxation, despite all the fiscal constraints. So, the FM was quite right to condemn Tories (AND right-wing commentators) demanding the Scottish Government blindly follows suit. Tories would also need to explain why “the world’s most powerfully devolved parliament” should act as a carbon copy of Westminster.

But still, the case for a different tax regime must be unravelled and explained. The SNP leader should emulate Liz Truss in one respect only – boldness. Ms Sturgeon should not just hold her nerve on tax, but explain her strategy in a broadcast as soon as possible to the Scottish nation, not the SNP conference in a fortnight’s time.

Far from being cowed, the Scottish Government should hold its nerve and announce its intention to plough new Scottish cash from Kwarteng’s ‘mini budget’ away from top earner tax breaks and into mitigating bankruptcy, hunger, misery and economic lockdown this winter, growing the economy through an energy crisis and Brexit-induced economic breakdown the tried and tested way.

Alternatively, some of that cash could help councils resolve the plethora of public sector pay disputes brewing this autumn. Those are the kind of options we expect to hear debated in the Scottish Parliament, but the dangerous arrogance of the UK Government needs a high-profile critic on air right now.

According to the Chancellor, there’s more tax-cutting to come. An articulate social democrat needs to stand up to this insane agenda. It won’t be fence-sitting Keir Starmer. It has to be Nicola Sturgeon.

Our columns are a platform for writers to express their opinions. They do not necessarily represent the views of The Herald.





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