Calls for tax changes to relieve burden on lower waged Scots

Scottish Government advisors are calling for ministers to levy more tax from Scotland’s higher earners to boost the country’s economic recovery and relieve the burden on lower-paid Scots. 

Calls for tax changes to relieve burden on lower waged Scots

Holyrood has been informed that the poorest are being hit hardest by the economic downturn caused by the coronavirus, with people on low incomes, who also face greater risk of unemployment, bearing too much of the burden for the funding of essential services.

Due to this, ministers are being urged to reform the council tax, to consider higher taxation and to introduce additional tax on second homes. The call has come from several organisations that advise the government, including the Poverty and Inequality Commission, the enterprise and skills strategic board and Highlands and Islands Enterprise (HIE).

Ministers are considering a range of steps to boost the Scottish economy amid warnings from one of the first minister’s economic advisers, Andrew Wilson, that the recovery could be one of the worst in the world. 

Last week, the Fraser of Allander Institute said that the Scottish economy is now in its deepest recession in living memory. It warned htat there will be some scarring on the econoy and it will take soem time before the economy recovers to a ‘new normal’.

Last week, Scottish Government advisory group led by ex-Tesco Bank boss Benny Higgins called for banks to finance struggling business and for a Scottish jobs guarantee to help safeguard and boost the Scottish economy in this unprecedented time. 

Ministers are believed to support Mr Higgin’s ideas in principle but believe they would struggle to implement the package based on current revenue and in the absence of more borrowing powers from Westminster.

The poverty and inequality commission said that any taxation changes must mitigate “the deep inequalities that this pandemic has laid bare”. In evidence to AGER, it added: “The raising of any additional revenues through taxation must be progressive, with those most able to contribute more, doing so.

“As a starting point, council tax is a regressive tax and there was pre-existing cross-party recognition that reform was overdue. This should now be picked up and pursued with urgency. There is also an opportunity to introduce new, innovative local taxes.”

The Scottish Human Rights Commission claimed that Scotland has a chance “to approach COVID-19 economic recovery by creating a more progressive system that maximises available resources in line with its human rights obligations”. It says options should include “increasing income tax for top earners and through wealth taxes”.

HIE has urged ministers to consider taxation and planning regulation to address the issues of empty and second homes to potentially increase supply of housing in some parts of Scotland, The Times reports. 

Senior SNP sources say that the Scottish Government is wary of taxation changes in the short term. Their focus is to persuade Westminster of the need for more flexibility over borrowing powers and the fiscal framework. In the longer term, ministers are said to be open to rethinking their approach on council tax, consideration of taxing wealth and a land value tax.

  • Read all of our articles relating to COVID-19 here.
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