Campaigners demand ‘genuine budget bravery’ with tax reforms in Scotland

Campaigners are calling on Scotland’s First Minister to show “genuine budget bravery” by introducing “fairer” tax reforms that can help raise cash for investment in public services.

With the Scottish Government facing an estimated £1.5 billion funding gap ahead of Tuesday’s budget at Holyrood, more than 60 campaign groups, think tanks, charities, trade unions and others bodies have joined together to demand action.

In a letter sent to the leaders of the five main political parties at Holyrood, they insisted that the budget statement, to be delivered by Deputy First Minister Shona Robison, should be a “pivotal moment for fundamental change”.

The groups included: Oxfam Scotland, Save the Children, the Poverty Alliance, the Child Poverty Action Group, the Church of Scotland and the think tank IPPR Scotland, as well as the Scottish Trades Union Congress.

They called on political leaders to “kick-start a series of fair tax reforms that together will serve as the linchpin for a more equitable, resilient, and prosperous Scotland”.

The demand comes in the wake of a report for the STUC which set out how a series of short and long-term changes to taxes in Scotland could raise more than £3.7 billion extra funding a year if implemented.

As part of that, it suggested increasing both the higher and top rates of income tax by 1p, to 43% and 48% respectively, while also reducing the threshold for the higher rate, so this would apply to those earning £40,000 a year or more, down from the current threshold of £43,662.

The STUC, together with groups such as Oxfam, the Poverty Alliance and IPPR Scotland, also backed a new 44% tax band, which would be levied against earnings between £75,000 and £125,140.

In their letter, the groups urged SNP leader Mr Yousaf, as well as the leaders of Labour, the Conservatives, the Liberal Democrats and the Scottish Greens, to “find consensus to chart a new path for social investment”.

Making the case for devolved tax powers to be used to “fairly boost social investment”, they insisted that “critical national priorities” must not be “put at risk or sacrificed due to a lack of sufficient investment”.

The organisations highlighted the “scandal” of child poverty, long waits for hospital treatment, problems with housing and roads infrastructure and the “damaging pattern of broken climate promises”.

But they said there was a “lack of consensus and collaboration” between the parties “about how to fairly and sustainably raise the additional resources needed” – branding this as “short-sighted”.

Deputy First Minister Shona Robison will unveil the Scottish Government’s tax and spending plans for 2024-25 in a budget statement to MSPs on Tuesday (Andrew Milligan/PA). PA Media

Jamie Livingstone, the head of Oxfam Scotland, said: “The Scottish budget isn’t just about balancing the books, it’s also about re-balancing the scales to ensure that everyone can live fulfilling, dignified lives in fairer, greener and caring communities.

“Achieving that ambition requires significantly more investment underpinned by a fairer tax system.”

Calling for action from the Scottish Government, he said: “The First Minister must move beyond short-term tax tweaks, however essential, and show genuine budget bravery by kick-starting common-sense tax reforms, challenging other party leaders to support the changes needed to deliver the transformative investment we all need.”

Philip Whyte, director of IPPR Scotland, said: “At this critical juncture, the Government must do more than just make minor adjustments to tax and investment.”

Instead, he said “bold action” was needed, calling on the Government to “match the ambition of its rhetoric, and seriously investing in public services while tackling poverty and climate change”.

Mr Whyte added: “The alternative is to leave a legacy of damaged prospects and low prosperity.”

Ruth Boyle, policy and campaigns manager at the Poverty Alliance, said: “A just and compassionate Scotland is one with strong, sustained social investment to make sure that everyone has the chance to develop their potential.

“People in Scotland believe in looking out for each other. But for too long our political leaders haven’t matched those values with social investment – weakening the shared services we have built together, and taking away the freedom and stability that people need to build lives beyond the injustice of poverty.

“The Scottish Government can take responsibility to fill the holes in the foundation of our public good, making progressive use of Scotland’s tax powers to create a stronger economy and a better society. People in poverty and struggling on low incomes can no longer wait.”

A Scottish Government spokesperson said: “The Budget will be set out tomorrow by the Deputy First Minister.

“She has been very clear Scotland is facing one of the most challenging budget settlements since devolution because of sustained high inflation and a UK Government autumn statement that failed to deliver the investment needed in Scotland’s public services.

“We are proud that Scotland already has the most progressive income tax system in the UK, protecting those who earn less and asking those who earn more to contribute more.

“This in turn allows us to provide a more comprehensive set of services than in the rest of the UK.”