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Blogs

Alex Salmond’s taxing realism: Scotland cannot afford socialist dreams

5 March 2014

9:59 AM

5 March 2014

9:59 AM

Alex Salmond ventured south last night to lecture inform the citizens of what he termed Britain’s ‘Dark Star’ of his latest plans. You can read his New Statesman lecture here. The most telling moment of the evening came, however, when George Eaton asked if Salmond favoured raising taxes on the wealthiest Scots. Specifically, did he find the notion of raising the top rate of income tax to 50 per cent attractive?

No.

Or as the First Minister put it:

‘We don’t have proposals for changing taxation. We certainly are not going to put ourselves at a tax disadvantage with the rest of the UK.’

It’s not quite read my lips, no new taxes but it’s not far from it. This should not surprise long-term readers. Some of us have been pointing out for years that Alex Salmond is not really very much of a socialist. He is, in terms of economics, much closer to the neoliberal end of the spectrum. He would doubtless bridle at the suggestion he’s much of a Thatcherite but when it comes to tax no other British politician in recent years has cited Arthur Laffer more frequently than Alex Salmond.

Of course the future of an independent Scotland will not be decided by Alex Salmond alone. The left (or some of the left) see independence as a means to an end: the creation of a socialist Scotland. They are entitled to their dreams but dreams is all they are. There is much less enthusiasm for this sort of stuff than they imagine.

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Polls consistently show that as many as 60 per cent of Scots expect their tax bill to rise after independence and rather fewer anticipate a dramatic improvement in public services that would compensate for that additional pain. It seems reasonable to suppose that this puts a brake upon their enthusiasm for independence. Hence Salmond’s desire to reassure Scots that tax increases are not on the agenda.

Of course, squaring this with the SNP’s spending commitments and the suggestion Scotland could borrow less too requires some finesse but that’s a different matter. The SNP have enjoyed great success by being one thing in Aberdeenshire and another in Lanarkshire but the bigger the promises the harder it becomes to straddle those two horses.

Still, Salmond is right: an independent Scotland will find itself in competition with the rump United Kingdom. The risks of capital, corporate and personal flight to a lower-taxed rUK are significant. Moving south of the border is neither difficult nor frightening.

And so Scotland’s policy options will inevitably be influenced and sometimes even constrained by decisions made in London. The Dark Star will still cast a long shadow. There is less room for manoeuvre than many Scots imagine. In this respect at least, the First Minister is a realist.

Are there no alternatives? Of course there are. Salmond could suggest he’d like, in time, to implement the thorough overhaul of the tax system recommended by the Mirrlees Report. That might be no bad thing. It could well leave Scotland with a better, more logical, more efficient tax system.

But making that promise now might scare people and scaring folk is not part of Project Reassurance. Hence Salmond’s plea to wealthy Scots that they have much less to fear than they think. Less will change than they assume.

I am not sure how many of those wealthy Scots will believe the First Minister but I don’t blame him for trying to persuade them that they will not be asked to pay very much more.

The independence vote is, of course, a bigger thing than a plebiscite on the SNP’s programme for the governance of an independent Scotland. It’s for life, not just for a parliament. Be that as it may, one would expect the SNP to form the first government after independence (and quite possibly the first several administrations) so the SNP’s platform is hardly an irrelevance nor something voters can reasonably be expected to avoid factoring in to their calculations.

So two cheers for Alex Salmond’s realism today even if it is also reasonable to wonder if that realism might be challenged by, for the first time in his political career, the experience of actually being asked to raise money as well as spend it.

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