SNP income tax changes: an attempt to balance left and right

Public Entrance Scottish Parliament

On Thursday, Scotland’s Finance Secretary Derek Mackay unveiled Scotland’s 2018/19 draft budget.

The budget, which can be viewed in full here, makes some notable changes to income tax. The 40p and 45p bands will be increased by one pence each while a new 19p rate will be introduced for those earning between £11,850 and £13,850. Furthermore, a 21p rate is being introduced for individuals earning between £24,001 and £44,273.

The Scottish parliament has had tax powers since its rebirth in 1999, but this is the first time it has made significant changes. For this reason, the changes are truly historic.

The SNP has long been called on to raise taxes from Scottish Labour and the Scottish Greens.

Green co-leader Patrick Harvie has said that the argument for progressive taxes is winning, and that the Greens are making their mark on the government.

As for Labour, newly elected leader Richard Leonard said in the chamber that more radical changes to taxation are needed.

The Scottish Conservatives have criticised the changes.

In one sense, change was inevitable. The SNP need to rely on other parties, and moving in the direction of the Greens and Labour gives them the ability to move forward without relying on Conservative support.

But the income tax changes are symbolic of the SNP’s difficult balancing act between the left and right of its electorate. Much of its support comes from small 'c' rural conservative areas while another large section has a more radical outlook. In 2015, the pro-independence wave that swept the SNP to power was enough to cover up economic differences, but the 2017 election showed that the party is vulnerable to support leakage at both its left and the right.

As a result, the SNP are attempting to be both bold and cautious at the same time. Tax cuts for low paid workers will be welcomed all round, but the small changes in the top two rates show the party is shifting to the left, but not so much as to lose more support on its right.

Two questions remain.

First, will the tax changes result in more revenue for the Scottish government?

Secondly, how much will Labour support fall and how much will Conservative support rise?

If any at all.

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