Scottish Labour will raise tax in Scotland by one pence higher than George Osbourne’s Tories have set it if they gain power in Holyrood this May.
This is one of the party’s election pledges in a bid to win back voters who have deserted them in favour of the SNP in recent years, but is it political hari kari – political leaders refrain or are Labour in touch with the electorate once again?
Through this move, the party believes that people have come to the end of their tether with austerity measures and are willing to shell out a few extra pounds of their hard-earned money to protect local services – with Labour focusing on education and saving the NHS.
By upping income tax, which Scotland will be able to do from April this year as part of new powers from Westminster – a legacy of the Independence Referendum, Labour say it would raise around £500 million a year.
This would be used to avoid cuts to education and local services and protect lower paid workers by giving those earning less than £20,000 a year an annual rebate of £100.
Labour’s sums say workers on a salary of £30,000 a year would pay less than £4 a week extra in tax, but someone on the same £144,687 wage as the First Minister would pay an extra £28 a week (£1447 a year).
You’ll hear more about this on the streets and doorsteps of the district over the coming months as both Falkirk election candidates Councillor Craig R Martin and Mandy Telford are backing the masterplan.
Dr Martin, who is standing for the Falkirk East seat, said: “This bold action shows what a Scottish Labour government would do, create a fairer and equal Scotland by asking those with the biggest shoulders pay more in taxes rather than continue with the policy of cuts, cuts and cuts.
“A Scottish Labour government would use all the powers we have to protect local communities. I am proud that this move would also protect low paid workers through a rebate system.”
Mrs Telford, standing for Falkirk West, said: “The SNP might be happy to cut education budgets and let attainment levels fall. Scottish Labour is proud to say that we would use the new powers to raise almost half a billion a year to stop these cuts and invest in the future of our children.”
Leader of Falkirk Council’s Labour-led administration Councillor Craig Martin, Craig R’s father, is also on board with a tax hike.
He said: “This extra money would stop the cuts to Falkirk’s education and other services. We would not have to cut our staff numbers, not have to close facilities and not have the detrimental effect on our kids learning.”
Not fit for purpose
The SNP’s two Holyrood election candidates for Falkirk say Labour’s tax rise plan is not fit for purpose.
Serving Justice Minister and Falkirk West MSP Michael Matheson and Falkirk East MSP Angus MacDonald say, new analysis shows, the tax hike would hit the incomes of thousands of the lowest paid workers in the district.
The SNP say raising the basic rate of income tax would affect 2.2 million in Scotland – including half a million pensioners.
The rebate for people on incomes of between £11,000 and £20,000 is also a “con” says Mr Matheson who pointed to UK Government figures that show many people, around one in three, do not claim for benefits they are entitled to at the moment.
There is an estimated one million taxpayers in Scotland earn between £11,000 and £20,000. If this average level of uptake was maintained, around 350,000 people on low incomes nationwide would miss out on Labour’s rebate – including thousands in the Falkirk area, according to the SNP.
Mr Matheson said: “Since announcing their plans for a tax hike on low earners, Labour has claimed that their proposed rebate would protect the poorest workers, but the fact is that Labour have no way of telling us how this scheme would work, or how they could guarantee that the rebate gets to those who need it most. The rebate is nothing more than a con.
“The reality is Labour cannot guarantee that a single person in Falkirk district would claim or receive this £100. The only thing that is certain is that Labour want to increase tax and hit our lowest earners.
“During the budget debate last week, we had the extraordinary spectacle of Labour’s finance spokesperson dismissing serious questions on how Labour’s proposed rebate would work as mere ‘details’ – now we know Labour’s plans could hit thousands of those on a low income and they have simply not thought through the full consequence of such a tax increase.”
Mr MacDonald said: “Last week the Resolution Foundation told us that even if Labour’s rebate plans are workable, they don’t make their planned tax hike any more progressive. The fact is Labour don’t have a clue how their plans would work or how many low earners in Falkirk district would be hit – these plans aren’t worth the back of a fag packet they were written on.
“While the SNP want to give the lowest paid workers in the Falkirk area a pay rise, Labour want to give them a tax rise, and Labour will have to answer to local workers for their regressive plans at the election in three months’ time.”