Main Menu

As I See It

Labour wants to fund services we can’t afford

Terry smiling headAlex Rowley wants to be the ‘honest’ man of Scottish politics and he at least deserves some credit for admitting his party would jack up taxes once it got into office.

But there’s the rub. The deputy Scottish Labour leader’s ‘Vision for Local Government’, presented to the media and a cabal of the party’s loyalists, will be lucky to catch the eye of the voters when the country goes to the polls in May.

Mr Rowley is a brave man for asking the electorate to back a plan underpinned by a series of tax increases.

While Labour’s public service ambitions are laudable they also ignore some simple electoral truths. While the public say they want better schools, more police, improved health care, they also want someone else to pay for them.

Mr Rowley should be reminded of a former Labour Prime Minister’s most famous phrase – “the pound in your pocket” – and realise that when it comes to putting a cross on the voting slip money talks.

It’s doubly troublesome for Scottish Labour to call for higher taxation at a time when the cost of living is about to rise, putting a squeeze on disposable income. Raising taxes would coincide with higher council tax charges, pension contributions and even the cost of fuel at the petrol pumps.

Labour argues that the lowest paid won’t be hit by their penny on income tax plan, and that its policy is to make those who can afford to pay more do just that.

But its tax plans would affect the bulk of workers on a median salary of £28,000. These include young aspiring workers with children and hopes of owning their own homes. They represent the future growth of the economy – and that includes its spending power.

Labour has set itself firmly against the Scottish Tories who argue that the best way to raise more money for public services is to get more people into work and therefore able to pay tax.

This argument goes further: that cutting taxes encourages more investment and job creation and therefore adds to total tax receipts.

Alex Rowley: honest politics (photo by Terry Murden)

Mr Rowley spoke yesterday about increasing economic activity, yet his party’s tax plans are just what the business community does not want to hear.

He said that raising the top rate to 50p would raise between £70m and £120m “which would be put into education”.

But it would cost more in the number of higher earners who would be deterred from moving to Scotland and others who would move away.

Already there are cases of companies finding it difficult to recruit from England because of the fear of higher personal taxation, including property taxes.

Should Labour implement its plans it could seriously undermine much of the entrepreneurial activity of recent years and reduce consumer spending which helps pay for products made in Scottish factories.

Raising taxes could be potentially catastrophic for the commercial property sector which relies on overseas investors to fund capital projects. From the Advocates Close redevelopment in Edinburgh’s old town to the biggest infrastructure deals, foreign investment makes them possible.

These investors are footloose, putting their money where they see the best returns. Top of the list for frightening them away is a high tax regime. So, raise taxes, and say goodbye to new property developments.

It was always a concern that once the Scottish parliament got its hands on tax-raising powers it would feed the desire of MSPs to fund and subsidise their pet projects.

They have been gifted new powers to finance, not just more public servants and community schemes, but economic growth which, in turn, will help build a better and fairer society.

This requires a will, and a change of mind-set. Essentially, it needs more imagination than simply throwing more money at services we simply cannot afford.

 



Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.