Tax increases on workers are no answer to brutal austerity

Statement from Socialist Party Scotland 

Scottish Labour leader Kezia Dugdale has proposed raising the Scottish Rate of Income Tax by a penny from April. Under Labour’s plan, £430 million a year would be available to compensate for the savage cuts facing local government in Scotland.

The proposed tax increases would apply to all three current tax bands that are being partially devolved to the Scottish parliament in April. These new powers – transferred under the Calman commission – mean the higher rates of tax cannot be increased without the same increase on the basic rate. Wider powers over income tax will not be devolved until the conclusion of negotiations under the Smith commission.

Low paid workers on less than £20,000 a year will be compensated through a locally available £100 rebate.

Socialist Party Scotland supports increased taxes on the elite 1% and the big corporations who routinely dodge and evade tax. However, Labour’s plan would hit everyone earning over £20,000 a year.

Dugdale called on the SNP government in Edinburgh to back this policy immediately. Hypocritically, the SNP responded by saying: “Labour’s proposals shift the burden of Tory austerity onto working people across the country”. This is the height of irony given the SNP’s complete capitulation to austerity cuts through their own implementation of Tory cuts.

Commentator Owen Jones claims that this is a sign of Scottish Labour “wrestling the SNP for the torch of social justice”. But it is far from being the reality.

Not an alternative

While it may gain initial support from some trade unionists and communities facing the slaughter of local government jobs and services in the next weeks, examination of this policy shows it is not a viable alternative to austerity.

All workers earning over £20,000 would be hit by an income tax rise – effectively a pay cut. Many of those facing tax hikes under this plan have already seen their wages cut by years of public sector pay freezes.

Moreover, at the same time as announcing the policy Labour councils, like their SNP counterparts, are voting through huge attacks on council services and the wages, terms and conditions of council staff.

Effectively this proposal means a continuation of austerity, only in a different way.

The Scottish Labour leadership should instead be calling on all their councillors to refuse to implement the cuts and fight for the money from Holyrood and Westminster to fully fund council services.

Councils should fight 

Cosla, who represent 28 of the 32 councils in Scotland, have rightly refused to accept the £350 million funding cut in the latest SNP budget. Only the seven SNP councils voted in favour. In addition, the four Labour-led councils who have left Cosla also oppose the cuts.

Why not bring together all the councils and appeal to others to participate in a fighting campaign uniting with workers and communities to refuse to implement the cuts?

These councils could co-ordinate the setting of no-cuts budgets on a legal basis using financial mechanisms such as borrowing, reserves and recapitalisation and renegotiation of historic council debt payments.

Raise the council tax?

Similarly, the call by many Labour councillors and some trade union leaders in support of council tax increases is also wrong. To fully mitigate the cuts the increases involved would need to be of the order of 70% to 90% – almost a doubling of council tax over two years.

There is no way increases of this scale would be tolerated by working class communities.

Those authorities planning for council tax increases have now been told by John Swinney they would face swingeing financial penalties.

The council tax is deeply regressive, benefiting the richest in society disproportionately. We want to see it scrapped and replaced with a wealth tax that reflects ability to pay.

It’s significant that the mounting anger of council workers and the wider working class is forcing Scottish Labour to criticise the SNP “from the left” for “implementing Tory austerity” and not using devolved powers to “redistribute wealth”.

However, their solution is to spread the pain of austerity rather than make a fighting stand.

The only viable way to end Tory austerity cuts is to refuse to implement them, to show the kind of implacable political will that demonstrates a fightback, rather than only opposing austerity in words.

Scottish Labour politicians on a local and national level have failed to demonstrate this so far. If they showed willingness to support a no-cuts budget policy and helped build a mass campaign to win back the billions robbed from jobs and services we would unite with them. If they carry on as they are doing the Trade Unionist and Socialist Coalition will need to stand in the coming Scottish Parliament elections to give workers and communities a fighting 100% anti-austerity alternative to Tory, SNP and Labour cuts.