FOR years the very notion of increasing income tax has been a political no-no. Despite the growing gap between the richest and poorest in society, there appeared to be little or no appetite for making big earners contribute more.
Now, all the signs are the Scottish Government is about to break the tax taboo and use Holyrood’s new powers to rearrange the tax bands and get people to pay a bit extra.
Illustrative examples of how the new bands could work suggest that anyone who is paid more than £24,000 a year could find themselves forking out.
The government’s discussion paper, published last week, blames austerity, the Brexit threat and a decade of Westminster cuts to Scotland’s budget for the need to consider an income tax rise.
The SNP fought last year’s Holyrood elections promising no increase in the basic rate and First Minister Nicola Sturgeon called proposals to bring back a 50p top tax rate “reckless”.
The party’s apparent conversion to higher income tax is partly down to the harsh political realities of minority government. Ms Sturgeon and her Finance Secretary Derek Mackay need at least one other party to back their budget next month in order for it to pass.
Unlike the last spell of SNP minority government, when Alex Salmond could look to Annabel Goldie for support over the budget, there will be no deals with the Tories.
But all three of the other parties – Labour, Greens and Lib Dems – are strong advocates of higher income tax for the richest, so the SNP needed to look at the issue seriously.
The Scottish Parliament has had tax powers from the start, but the original ability to raise or lower the basic rate by up to 3p was never used.
Even with the increased control offered by the latest round of additional devolution, the SNP’s use of tax powers has been limited to opting out of an above-inflation rise in the threshold for 40p taxpayers introduced by the UK Government. So if the Scottish Government budget on December 14 does include a rise in income tax and a shift in how the burden is shared between those on different levels of income, it will be a historic step.
Polls have often claimed people are willing to pay more in tax to help fund better public services. But parties who have gone into elections proposing tax increases have usually found little reward.
There is no election until 2021, so there is an opportunity to bring in potentially unpopular policies without having to face the voters imminently. But it could be argued there are some signs of a shift in public opinion.
Labour’s unexpectedly good performance at the general election is seen by some as evidence of a new demand for a fairer society.
After the banking crisis and years of austerity, many people are dismayed at the plight of people suffering drastic cuts to their benefits and being forced to use food banks to survive.
Labour’s general election manifesto, which included lowering the 45p threshold and reintroducing a new top 50p band, offered an alternative approach.
Whether that’s a correct analysis or not, the new readiness of parties to debate the merits of an income tax rise ought to be welcomed as a positive step.