Labour’s 1p tax is not anti austerity

Labour’s latest wheeze, to increase income tax for Scots by 1p, has attracted a fair bit of attention. It has not been universally welcomed and I am as yet unpersuaded. Others have gone into some detail about the proposal and how it might work, or not work as the case may be. I want to raise some fundamental objections to the proposal.

Contrary to what many from Labour have said, this is not an anti austerity measure. Cuts to public services are not the only way to impose austerity. Austerity is essentially taking money out of the economy.  Cutting the income of workers has the same effect. And raising income tax does precisely this – reduce the income of working people. It does not raise the amount of disposable money in the economy. If this money is then given to local authorities, there has been no effective change in the economy at all. It is simply a variation of robbing Peter to pay Paul. Now you may think this is a just way to preserve public services, but it has nothing to do with challenging, let alone reversing austerity.

Missing from Labour’s announcement is any mention of who is responsible for the austerity and the cuts to public services – the Tory government at Westminster. As a Unionist party, Labour clearly does not want to blame the Westminster government too much, as it would raise some awkward questions as to why Labour supported the Union. Much easier to blame it all on the SNP, ably supported by the media.

Effectively what Labour are proposing is that Scottish workers pay extra tax in order to ameliorate the cuts imposed by Westminster. Remember this extra tax is only to try and reverse the Tory cuts from Westminster. It is not to raise additional money for public services. As working people in Scotland, as in the rest of the UK, have already suffered years of frozen or stagnating wages, it is far from clear why we should be further burdened.

My final objection is that this proposal, if enacted, will set a very, very dangerous precedent. The one person rubbing his hands with glee about this will be George Osborne. If this goes through and Scots are willing to pay more just to offset Tory cuts, then why would he not make further cuts to the block grant? He will have had confirmation that his Unionist pals in Labour are only too willing to pass on the bill to working people in Scotland.

These cuts come from Westminster and any opposition to them must include opposition to Westminster.  Only independence ensures that we will have austerity imposed on us from elsewhere. Weren’t we supposed to be Better Together? Seems very much like Worse Together.

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Filed under Economics, Scotland

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