Until now the political appetite to use the Scottish Government’s tax powers could best be described as limited. Ministers were naturally cautious around the new tax powers – tax is complicated – and alongside the tribal political dynamics we have in Scotland any debate on tax is a definite challenge.
So its good to see the Scottish Government throwing that caution out the window and opening up the debate with the very welcome publication of a discussion paper.
We just hope politicians across all parties will use this opportunity for a more rational, less politicised debate on the use of tax powers and how we spend income. This must start with a fundamental debate on what we want to see these powers achieve – a point SCVO will be repeating ad nauseum.
The First Minister stated that it was important to “begin a debate about how we support our economy and fund public services for the future” and the paper includes thoughts on how the tax powers can be used to reduce inequality – some good starting points for discussion.
At SCVO we have been engaging our members in a wide-ranging conversation on tax and spending options, and what has quickly become apparent is the need to change the conversation around tax. Why? Because political and public debate across both Scotland and the UK has put the emphasis on having a ‘progressive’ (whatever that means) tax system rather than on what we want to achieve with tax income. In contrast, some other countries in Europe – where tax systems are flatter (although often at a high rate) and are not particularly ‘progressive’ in design – the end result is better public services and a fairer society. It seems tax can be a means to a positive end.
However, there is also the uncomfortable truth that we won’t be doing everything we’ll want with the tax powers the Scottish Parliament has as they are very limited in scope. And lets not forget, the use of tax powers is also a complicated process that introduces volatility and uncertainty. One thing we will need to do is better understand the volatility of our tax base.
The Scottish Government and Parliament have done much to articulate their end goal of a creating fairer, more socially just Scotland. To achieve that much more needs be done to link that vision to tax and spend decisions. At SCVO we believe that doing so would enable some of those difficult choices around tax and spend to be met with understanding and support across society.
So, once again the key question is this: what do we want the use of these powers to achieve?
From a third sector perspective conclusion is simple. It’s time to stop talking about building a fairer society – we need work out how to fund a fairer society.
View SCVO’s briefing on the above topic here.