Brian Monteith: Who will prevail as tax battle lines are drawn

IN a foretaste for the coming Scottish Parliament election there was a vote this week about whether or not to increase Scottish income tax. It was proposed by the Scottish Labour Party and defeated. I fully expect the same result at the elections in May '“ another defeat for Scottish Labour, only probably by a greater margin.

Will that sound the death knell for raising taxes in Scotland? Possibly, but with one caveat that I’ll explain at the end of this article.

Of course this week’s vote was in Holyrood itself with only the MSPs having a say. It was essentially a pre-election stunt by Labour to try and show the SNP is not what it claims to be and is not powerless to act.

There was never any chance of Labour winning the vote but that didn’t matter for Labour leader Kezia Dugdale – it was all about making a point. That point was that the SNP is not as anti-austerity as it claims – it talks like long-haired lefty lecturers but acts like right-wing baldy bankers.

To the extent that the SNP voted with the Conservatives to prevent the tax rise, while the Liberal Democrats supported Labour in favour of one, drew a clear line between the parties.

The vote was not an exact copy of what will happen in the election, however, for when it comes you the public exercising your choice you will have a third option to consider. Beyond maintaining the SNP’s status quo (no tax changes) and Labour’s tax rise the Conservatives are advocating a tax cut. It will be interesting to see how the votes fall.

Will the Tories be able to attract aspirational workers and tax-payers with a tax cut? I would like to think so; if only so they are rewarded for standing up for what should be their true philosophy of limited government delivering limited taxes. I would also like to think that Labour receives the backing of those that believe in a bigger state and bigger taxes, but maybe that group of people is not as big as it once was, or at least it was once perceived to be.

This coming election will be the first time there has been a genuine choice between tax-cutting and tax-increasing political parties. True, John Swinney once advocated a penny on the pound tax increase – but that was against every other party offering the status quo, this time there is a genuine alternative.

The effect of Dugdale’s proposed tax increase goes further than she is prepare to admit. She claims she is aiming to hit the “well-heeled” who can afford it but it would in fact hit every earner that pays income tax.

And contrary to what John Swinney has argued it would hit higher rate taxpayers more. This is because the benefit of the high threshold for when tax starts benefits the lower earners the most. If Swinney can’t do his own sums and see that is the case then I would not trust him with my pocket money, never mind the nation’s finances.

So the Labour proposals are a genuine example of what is called progressive taxation and natural Labour voters usually like that sort of thing. But this is not a usual election and people will not be voting solely on the question of tax rates. Many will just simply vote SNP because they have fallen out of love with Labour and are now besotted with Nicola Sturgeon – the issue of tax will be lost in the fog of war.

It may therefore be difficult to say that the tax policy has been popular or not. I suspect both the SNP and Labour Party will be conducting some behind-the-scenes surveys and focus group interviews to try to discover if it is a policy that might be attractive in the future. For all we know, Labour’s vote might still collapse, but just not collapse as much because of the new higher tax policy.

For the Conservatives it is probably much easier to discern if their support has climbed because of their tax-cutting policy. Of course if their vote falls then there will be a great deal of scratching of heads – it would suggest there is just nothing that the Tories can do to recover.

A good hard-working and effective leader, genuine Conservative policies and in many ways the most genuine unionist party on the scene – what’s not to like for typical right-of-centre sympathisers? Surely the Tories would then have to decide if it was worth carrying on at all and start looking to form a new party with none of the baggage of the past?

Oh, and the caveat? If the SNP suggested a rise in income tax would the Scottish public oblige and support it? Possibly. It is the great unknown. Only if the SNP find the bottle to advocate the very policy that all their other grievances and complaints point to – that the Scottish Parliament uses its new powers to raise taxes – might we establish just how popular higher taxes are. Bring it on I say. It’s time we knew.