Ahead of the launch of the Scottish Government’s paper on The Role of Income Tax in the Scottish Budget, please find below an article by First Minister Nicola Sturgeon.
Earlier this year, in the Programme for Government, I set out plans for the Scottish Government to publish a discussion paper on the role of Income Tax in Scotland’s budget.
Against the backdrop of continued UK austerity which will see Scotland lose £2.9 billion from our budget over a 10 year period, rising costs as a result of inflation, an ageing population and with the prospect of a deep and damaging Brexit on the horizon it is important that as a parliament and as a country we begin a debate about how we support our economy and fund public services for the future.
That discussion paper will be published this morning and I hope that by providing facts and impartial analysis it can provide a platform for all parties to engage in an open and honest discussion about the role of income tax in our budget. The paper will set out the contribution Income Tax makes to Scotland’s budget, what our taxes pay for and the extent of the changes the Scottish Parliament can make. It will analyse the options all parties put forward at the Scottish election last year and set out as illustrations some of the alternative approaches we could take. The paper also sets out the parameters we are operating in.
Income Tax is one of the few tools the Scottish Parliament can use to change the size of the Scottish budget, but it is limited in its scope. More than 60 per cent of our spending power is determined by decisions taken at Westminster. Continued UK government austerity will remove more from public spending in Scotland than any sensible Income Tax change could ever compensate for.
So the debate needs to be about more than filling the gaps created by Westminster austerity or parties trying to outbid each other. The paper I will publish today will include four tests that I believe provide a basis for establishing any future position on tax and four alternative approaches that demonstrate different ways in which those tests can be met. These approaches are not fixed positions or government proposals, but starting points for a discussion that aims to balance the interests of our economy and individuals with the pressures on public services and the importance of tackling inequality in our society.
The first of those tests is that we aim to maintain and promote the level of public services which the people of Scotland expect. The second is that the lowest earners must be protected. Thirdly, any changes put forward by the Scottish Government must make the tax system more proportionate and progressive – helping to tackle inequality in our society. Finally any changes, when balanced against our spending commitments, must not cause harm to our economy.
Since devolution we have taken an approach to public services that has seen successive governments fund economic development and national infrastructure, invest in education and the NHS, and develop a unique social contract, providing universal services that are of benefit to us all as a society, such as care for the elderly, nursery education and childcare and free university education. These policies – which exceed anything available elsewhere in the UK – help individual households with their own finances as well as enabling people to contribute more fully to the economy.
In looking ahead all parties must balance the services we provide to businesses and individuals against the contributions we ask people to make.
On a number of occasions since devolution the Scottish Parliament has demonstrated that it is up to task of meeting the challenges we have faced as a nation. For our part the SNP Scottish Government is ready and willing to engage in this debate and to see if a consensus position that protects both our economy and our public services is possible. Today the other parties must demonstrate that they too can put aside party interest for the national interest.