Labour Research May 2016


Use tax-raising powers, says STUC

Whoever wins the Scottish elections on 5 May, the new government can expect lobbying by the trade unions to use its tax-raising powers to tackle inequality. 

New powers on tax, welfare, employment programmes and tribunals mean the Scottish government will have a substantial level of control over its finances. 

According to think tank the Institute for Public Policy Research, that amounts to half of devolved expenditure (by the Scottish government and local authorities) and 15% of benefit spending. 

While Labour and the Lib Dems had signalled their intention to increase income tax to mitigate public spending cuts, Grahame Smith, general secretary of the Scottish TUC, said that the governing SNP’s position was “hugely disappointing”. He singled out its refusal to increase tax on earnings of over £150,000. 

STUC plans for tax reform focus on the replacement of the Council Tax with a “steeply progressive” property tax based on regular revaluations, and a new approach to the taxation of high incomes. And as manufacturing has not recovered to pre-crisis levels, it says that industrial policy should include specific plans for internationally traded sectors; support for different models of ownership; the provision of “patient, committed capital” to growing firms; and investment in skills and management, with a central role for unions.

It adds that a clear government focus on equality should improve routes into work for all workers, through lifelong learning, career progression and the Living Wage.