By Harvey Dodds, IMT Edinburgh
The draft budget presented by the Scottish Government in December marked a chance for the SNP to embellish the anti-austerity credentials they have earned in recent years with a bold budget. With the tax powers that have been devolved to Holyrood, it would have been possible to significantly raise tax for the highest earners in order to fund redistributive policies, public sector pay, and investment without affecting lower earners. This, however, was not the case.
Instead, cosmetic changes were made to income tax rates and the highest earners are to be taxed only 1p extra. While the amount this will generate is not insignificant, it is largely offset by tax breaks for business, according to the STUC. Moreover, the benefits of the changes to taxation for lower earners are only marginal, while the losses for higher earners are likewise minimal.
The failure to fully capitalise on these taxation powers comes at a time when real disposable income for Scottish households has been falling for the past 10 years, and is forecast to continue falling for another 5 – this is an unprecedented length of time. The proposed budget has attempted to combat this through pay increases for public sector workers. However, the largest pay rise available – 3% – is only available for a quarter of all public sector workers, with those earning about £30,000 capped at 2% and those employed by local authorities missing out altogether. And even this increase of 3% equates to a real terms pay cut, with inflation running at 3.3%!
As the cost of living gets higher and wages continue to stagnate and even fall, it was imperative for working people that the SNP produced a budget which addressed these issues. However, they failed to do so, instead offering benefits for businesses and timid tweaks to a system that is in serious crisis. Given the SNP attempts to straddle the class divide and is therefore wrought with class contradictions, it is unsurprising that they have not dared to fiercely fight for the interests of one class or another with this budget, instead favouring indecisive policies. This does, however, underscore the importance of fighting for socialist ideas – many SNP voters will have been hoping for a budget that offered vision and optimism. Instead the SNP gave them a lesson in what independence under capitalism will look like – more of the same. It is capitalism that we must break from in order to meet the needs of the Scottish people.