Monday, 17 March 2008

Impending Disaster or History Repeating Itself?

So, the latest scare story is that Scotland will see a mass exodus of rich people under a local income tax.

Does this ring any bells?

Before the New Labour victory in 1997, high profile high earners lined up to claim they would leave the UK if voters chose to kick out the Tories and elect Tony Blair's lot.

Before devolution, again stories appeared in the media arguing that businesses and individuals would flee Scotland at the prospect of us taking greater control over our own affairs. I remember, living in the Borders at the time, all the talk of Berwick-upon-Tweed becoming a haven for people who wanted to continue working in Scotland (primarily Edinburgh), but wanted to live in England to escape the 'dire consequences' of giving a Scottish Parliament control over services like the NHS and universities. It is somewhat ironic that a significant number of people of that town now want to be part of Scotland, for the opposite reasons!

An SNP victory, it was also suggested, would see people leaving Scotland to seek sanctuary over the border. Remember that noose emblazoned across one tabloid newspaper on the day of the last Scottish Parliament election?

Well, there was no mass exodus - at any of the points listed above, from either the UK or Scotland.

Opponents of a local income tax are becoming quite desperate in their attempts to find reasons to oppose it, and this latest attempt is more than a little pathetic. The people listed in the newspaper article above are super rich, and can clearly afford to pay more in local taxation. Has it ever occurred to any of those people who are commentating on this matter, than the rich individuals listed would be happy to pay more in local taxation if it meant that people who are really struggling to pay the Council Tax would have their bills cut? They really are assuming the worst of those people.

Last week, the critics were opposing a local income tax because it would only be levied on earned income, and not take into account those people in Scotland living off unearned income like dividends. A few points here. Firstly, are we really going to keep in place a discredited system like Council Tax, which is detrimental to so many people in this country because of how it will/will not impact on a handful of wealthy individuals? Secondly, if these wealthy individuals are not going to be liable for a local income tax, then they evidently aren't liable for income tax, which is reserved to Westminster. Perhaps people are pointing the fingers in the wrong direction on that one. Thirdly, the critics can't have it both ways. One week they are claiming that the local income tax will benefit the super rich, and the next the claim it will penalise them to the point that they will flee the country!

The people of this country will see through arguments that inconsistent - and can tell the difference between intelligent debate and opposition, and opposition for its own sake from a Labour Party, its cronies and other self-interested hangers-on bereft of any new ideas of their own, and certainly without any genuine drive to improve the lives of the people of Scotland.


Anonymous said...

The Scotsman story is ridiculous, but many moderate earners would face increases under a local income tax and it would be unfair to deride their opposition. A LIT would result in a dual income family with kids earning, say, £32k each, paying more. Now that couple isn't poor, but by the time you factor in paying for childcare for 2 or 3 kids, travel costs so they can work - is it equitable that they should pay many times more than the pensioners in the same street with investment income?

People who are struggling to pay at the moment can have their bills cut. Some people who are admittedly not poor but are not in the same league as Brian Souter & Fred Goodwin and don't qualify for any benefit would pay more. It's not as clear cut as you make out.

Julie Hepburn said...

Hi Anon.

The only thing I intended to be 'clear cut' about was the ridiculous notion that a LIT would cause a mass exodus of the rich from Scotland.

At no point did I 'deride' the opinions of people who may have to pay slightly more under a LIT. My derision was reserved for certain opposition politicians and some elements of the media.

The SNP has never claimed that EVERYONE would be better off under a LIT, but that MOST people would.

Under a LIT, for example, my husband and I would have to pay more than we currently pay in Council Tax - and I happen to think that's fair if it helps ease the burden on those who can least afford it.

In my view, there is no perfect system of taxation and we can only strive to do the best we can for the vast majority, with particular attention to the most vulnerable in society. I believe the LIT is fairer overall than either the Council Tax or a Land Value Tax. I also think that arguments about investment income are a bit of a red herring in this particular debate. Yes, people should pay tax on this income, but there are other means of taxing this (which are currently reserved to Westminster).

I agree with you that childcare costs are a huge burden on families, but I don't think that's an argument against a LIT, but rather an argument FOR greater investment in universal, genuinely affordable childcare.

Mountjoy said...

I suspect a lot of high earners are delighted to see the Labour/LD regime out of Holyrood, and a sensible government in place.

Isn't Scotland experiencing net in-migration, including of high earners, these days ?