Scottish Government Tax Raising Powers

[Granny Danger]

On 15 December the Scottish Budget will take place with increased powers in relation to Income Tax.  Firstly it must be said these powers are very limited in their flexability and the Scottish Parliament has been given no powers to vary either Corporation Tax or VAT, the two big tax earners.

The question is what should the SNP Government do?  Should they change the tax band for the 40% rate?  Should they increase the base rate to help raise money to mitigate the Tories' austerity agenda?

This is arguably the most difficult decision for the SNP at Holyrood for a long time.  Personally i favour the Labour proposal of a 1p increase IF a way can be found to rebate the lowest earners; I'm not sure if that has been shown to be within the new powers.

Basically it is a fine political tightrope.  Do the SNP take a more radical approach to mitigate the worst effect of Tory cuts and risk alienating a section of the electorate with possible consequential implications for Independence, or do they avoid raising taxes and risk their anti-austerity position being seen as nothing more than hot air?

[Antlion]

I can't see how SLab or the Tories could possibly claim the SNP should raise taxes to pay for their own preferred sovereign government's austerity programme. Their argument will essentially be that Scots should pay for the results of their beloved (and still unquestionable) constitutional setup. SLab will try like hell, though.

The moral aspect is more murky. On the one hand, if the Scottish government has the power to make people's lives easier, they should use it. On the other, Scots can't really complain about Tory austerity when they voted to be subject to it.

[Newbornbairn]

23 minutes ago, Granny Danger said:

On 15 December the Scottish Budget will take place with increased powers in relation to Income Tax.  Firstly it must be said these powers are very limited in their flexability and the Scottish Parliament has been given no powers to vary either Corporation Tax or VAT, the two big tax earners.

eh? Unless Scotland differs drastically from the UK, Income Tax is by far and away the biggest tax earner for government.

https://www.ifs.org.uk/bns/bn09.pdf

Table 1. Sources of government revenue, 2016–17 forecasts Revenue (£bn) Percentage of total receipts

Income tax (gross of tax credits) 182.1bn 25.4%

National Insurance contributions 126.5bn  17.7%

Value added taxa 120.1bn 16.8%

Corporation tax (net of tax credits) 42.7bn  6.0% 

[DublinMagyar]

Admiral Ackbar came to mind

[renton]

30 minutes ago, Granny Danger said:

On 15 December the Scottish Budget will take place with increased powers in relation to Income Tax.  Firstly it must be said these powers are very limited in their flexability and the Scottish Parliament has been given no powers to vary either Corporation Tax or VAT, the two big tax earners.

The question is what should the SNP Government do?  Should they change the tax band for the 40% rate?  Should they increase the base rate to help raise money to mitigate the Tories' austerity agenda?

This is arguably the most difficult decision for the SNP at Holyrood for a long time.  Personally i favour the Labour proposal of a 1p increase IF a way can be found to rebate the lowest earners; I'm not sure if that has been shown to be within the new powers.

Basically it is a fine political tightrope.  Do the SNP take a more radical approach to mitigate the worst effect of Tory cuts and risk alienating a section of the electorate with possible consequential implications for Independence, or do they avoid raising taxes and risk their anti-austerity position being seen as nothing more than hot air?

I'd favour something like the Greens Holyrood proposal to put more gradations in the tax bands so that there aren't such steep bands as the 20, 30 and 40% bands currently. I think they were advocating an 18, 22, 30, 42 and 60% bands with thresholds designed to reduce the overall tax burden on lower earners while increasing the overall income tax take.

[Granny Danger]

10 minutes ago, NewBornBairn said:

eh? Unless Scotland differs drastically from the UK, Income Tax is by far and away the biggest tax earner for government.

https://www.ifs.org.uk/bns/bn09.pdf

Table 1. Sources of government revenue, 2016–17 forecasts Revenue (£bn) Percentage of total receipts

Income tax (gross of tax credits) 182.1bn 25.4%

National Insurance contributions 126.5bn  17.7%

Value added taxa 120.1bn 16.8%

Corporation tax (net of tax credits) 42.7bn  6.0% 

Should have read 'the other two...'

[Loondave1]

I can't see how SLab or the Tories could possibly claim the SNP should raise taxes to pay for their own preferred sovereign government's austerity programme. Their argument will essentially be that Scots should pay for the results of their beloved (and still unquestionable) constitutional setup. SLab will try like hell, though.

The moral aspect is more murky. On the one hand, if the Scottish government has the power to make people's lives easier, they should use it. On the other, Scots can't really complain about Tory austerity when they voted to be subject to it.

Another excuse for the so called "left" SNP to sit on any powers devolved and greet about Westminster.

[renton]

3 minutes ago, Loondave1 said:

Another excuse for the so called "left" SNP to sit on any powers devolved and greet about Westminster.

There are excuses and then there are sound reasons. No doubt the SNP could be more radical with at least some of the powers at it's disposal, but it must be recognized that the Scottish government can only work within the confines of it's devolution limits. Bare in mind it's not even full devolution of income tax as it doesn't allow for full variance of the personal allowance, or tax rates on dividends. Taking a holistic view of it, there are any number of things we could do to improve the tax take and productivity while taking a progressive viewpoint. however, Scot Gov only has the direct, politically charged income tax bands to play with.

[Antlion]

14 minutes ago, Loondave1 said:

Another excuse for the so called "left" SNP to sit on any powers devolved and greet about Westminster.

So you want Tory austerity, but you want, as a Scot, to pay more to alleviate Tory austerity? That seems odd. Perhaps you can explain how you both want Westminster austerity but want to pay extra not to have Westminster austerity.

[Newbornbairn]

15 minutes ago, renton said:

 however, Scot Gov only has the direct, politically charged income tax bands to play with.

Don't they control Council Tax levels too?

[Baxter Parp]

4 minutes ago, NewBornBairn said:

Don't they control Council Tax levels too?

No, they set up the system, not the amounts paid.  So it's the councils that say what band A pays, for instance.

[renton]

4 minutes ago, NewBornBairn said:

Don't they control Council Tax levels too?

Yeah, which they should be far more radical with, but like all direct taxes it's difficult politically to do.

The income tax bands should be shifted, if only to bring the PA back towards it's original intention.

[strichener]

18 minutes ago, Baxter Parp said:

No, they set up the system, not the amounts paid.  So it's the councils that say what band A pays, for instance.

With the council tax freeze, they were effectively setting the rates.  They are also setting in place a 3% limit on increases from 2017/18, although as you are keen on briefing papers, here is an excerpt from a Scottish Government one:

Quote

END TO COUNCIL TAX FREEZE AND 3% CAP
As noted earlier, another aspect of the Government’s proposed reform is to end the Council Tax freeze.  However, the Government states that any future rises will be capped at 3% per year.  It is not clear how this will be enforced.  During the Council Tax freeze, the Government threatened to withhold a council’s share of the additional £70m per year allocated to compensate councils.  However, the Government has not stated how it will enforce a 3% cap in future years.  It may require primary legislation, or develop another "holdback" policy for a certain amount of resource.

which means that the council does not have control over what the Band D property charge should be.

[Baxter Parp]

Just now, strichener said:

With the council tax freeze, they were effectively setting the rates.  They are also setting in place a 3% limit on increases from 2017/18, although as you are keen on briefing papers, here is an excerpt from a Scottish Government one:

which means that the council does not have control over what the Band D property charge should be.

Band D is set by the council and all the other bands are a set percentage of it, the Scottish government are saying that rate shouldn't rise by more than 3%, that's all.

Band	Value (£) (as at 1991)	Rate of Band D	Percentage
A	Up to 27,000	6/9	67%
B	27,001 to 35,000	7/9	78%
C	35,001 to 45,000	8/9	89%
D	45,001 to 58,000	9/9	100%
E	58,001 to 80,000	11/9	122%
F	80,001 to 106,000	13/9	144%
G	106,001 to 212,000	15/9	167%
H	212,001 and over	18/9	200%

[strichener]

3 minutes ago, Baxter Parp said:

Band D is set by the council and all the other bands are a set percentage of it, the Scottish government are saying that rate shouldn't rise by more than 3%, that's all.

Band	Value (£) (as at 1991)	Rate of Band D	Percentage
A	Up to 27,000	6/9	67%
B	27,001 to 35,000	7/9	78%
C	35,001 to 45,000	8/9	89%
D	45,001 to 58,000	9/9	100%
E	58,001 to 80,000	11/9	122%
F	80,001 to 106,000	13/9	144%
G	106,001 to 212,000	15/9	167%
H	212,001 and over	18/9	200%

You are missing the point.  Councils will not have the freedom to set Band D to whatever level they wish.  Also your table that you pulled off the SG website is out of date.  The next Council Tax bill will be based on the new bandings:

• A - 67%
• B - 78%
• C - 89%
• D - 100%
• E - 131%
• F - 163%
• G - 196%
• H - 245%

[THE KING]

Tax any no voters.

[John Lambies Doos]

Tax any no voters.

This... tax breaks for Yes voters.
Independent in a wk

[ICTChris]

Cut tax for me.  Increase tax for people earning £1 more than me.

[Baxter Parp]

58 minutes ago, strichener said:

You are missing the point.  Councils will not have the freedom to set Band D to whatever level they wish.  Also your table that you pulled off the SG website is out of date.  The next Council Tax bill will be based on the new bandings:

• A - 67%
• B - 78%
• C - 89%
• D - 100%
• E - 131%
• F - 163%
• G - 196%
• H - 245%

Setting the Council Tax to whatever level they wish wasn't the issue.  The Scottish Government doesn't set it.

[strichener]

2 hours ago, NewBornBairn said:

Don't they control Council Tax levels too?

 

56 minutes ago, Baxter Parp said:

Setting the Council Tax to whatever level they wish wasn't the issue.  The Scottish Government doesn't set it.

The Scottish government have set it for the duration of the freeze.  In future they won't be setting it but they will be restricting the level that the councils can set it to.  They are also going to be taking money raised through CT and using it for centralised expenditure.  It's like they don't want to use the tax raising powers that they are getting and would rather raise the money through a mechanism that will see people putting the blame for the increased bills on their local council.