Ho, Ho, Ho! Roll out the Christmas metaphors and allusions, SNP finance secretary John Swinney has delivered his budget for next year – and he’s not in the mood to play Santa Claus. Instead he’s acting as the parsimonious Ebenezer Scrooge before he found redemption – rather than end what he calls austerity, he’s going to make it worse than it should be.
His budget is a turkey, by which I mean it’s overweight and underpowered, ensuring it just won’t fly.
For as long as the Holyrood parliament has existed, first in opposition and then in government, John Swinney has been telling us that there were not enough powers to set tax rates that would make a difference to Scotland’s economy. This was a fib, for the powers existed to introduce charges for services while providing rebates to certain groups of people that, put together, would have worked in the same way as taxes. Unfortunately that option did not help the SNP narrative that Westminster was holding back on powers, instead John Swinney had a Christmas list and the power to vary taxes was at the top of it.
Along came the fairy godmother, Wendy Alexander, who set up a commission of pumpkins which cheered on the idea of varying taxes. Then to everyone’s surprise David Cameron put on a false white beard and a red suit with ermine collars and cuffs and delivered new laws down John Swinney’s chimney – little Johnny could raise or cut taxes after all.
But our wee Johnny was still not happy, he stamped his feet and huffed and puffed for he still wanted more. David Cameron has already promised to give Johnny what he wants but making these politicians’ toys takes time so he will face to be patient until next Christmas. Even so, the new powers from that earlier festive parcel allow Scottish income tax to be varied so long as all the bands change at the same rate.
If John Swinney wants to play at Santa Claus he can borrow that red suit and white beard and cut our taxes. Of course he could raise them as well – so what would wee Johnny do now that he alone could make the decision?
On Wednesday we found out two things, the first was that John Swinney would not cut income tax because it would benefit higher earners more. The second was that he would not raise taxes because, er, it would punish higher earners more.
These two things told us a third thing, that John Swinney is not very good at maths or logic – for the two decisions are mutually exclusive and cannot be justified using the same argument. If cutting taxes by a universal flat rate benefits the wealthiest the most then raising taxes must also punish them the most in cash and percentage terms and there’s evidence to show this is true.
So why, after demanding all these fancy new powers for wee Johnny under his Christmas tree, does he not want to unwrap them and play with them? Why, when Tory austerity is (allegedly) causing John Swinney all sorts of problems, does he not just raise taxes to end the austerity, knowing the richest will pay proportionately the most?
The answer in one word – “election”!
John Swinney does not want to spoil everyone’s Christmas by announcing tax increases, so he has put it off for now. He can always do it another year if he gets to stay in power. Nor does he want to cut taxes to make the economy grow faster because that would blow apart his repeated fibbing about there being Tory austerity.
In cash terms, John Swinney has more to spend than last year and, allowing for inflation, it’s slightly less, but only slightly. The difference is less than the amount of money he was unable to spend last year and still has on reserve. There is in truth no austerity in the way John Swinney talks about it.
If he cut taxes, the falsehood of his claims about austerity would become apparent to everyone. If he were to raise taxes he could claim to be tackling austerity but it would cost him lots of votes, not a good idea when an election is about to be held.
The result of all of this is that the Scottish economy will continue to grow at a smaller rate than the rest of the UK. There will be fewer jobs created and unemployment is likely to be higher. Tax revenues will be sluggish and not meet the targets set by John Swinney. This will force him to make more cuts in his spending plans for future years. Rather than protect Scotland from so-called “Tory austerity”, he will actually create his own.
There is another way and it’s full of Christmas cheer – instead of being Scrooge he could have played Santa Claus and cut everyone’s taxes. The idea there are no savings to be found in Scottish government is a lie. There are hundreds of millions that could be released if politicians stopped pretending they can do things better than ordinary people and ordinary businesses. Scrooge eventually saw the light, sadly I don’t hold out such hope for Ebenezer Swinney.