This week marked a significant moment in the development of devolution: the Scottish Government passed the first Budget to contain a distinct ‘Tartan Tax’.
Derek McKay, the Finance Minister, approached it in the SNP’s usual all-things-to-all-people fashion. He raised the higher rates whilst introducing a new, 19p ‘starter rate’ for those on the lowest incomes. When these policies were taken on top of the personal allowance rises introduced by the UK Government, Nationalists were able to claim that most Scots weren’t seeing tax rises.
There has been some unease, especially in national Labour circles, about the rush to devolve tax powers, and this may end up being vindicated. But it does make it harder for the SNP to obscure the realities of Scotland’s fiscal position, such as how few higher-rate taxpayers it has.
As John McClaren argued in yesterday’s Scotsman, by choosing to put the squeeze on these wealthy individuals the Nationalists are passing up the opportunity to attract more of them to Scotland, and risk losing some to other parts of the Kingdom.
The fact that citizens and consumers can easily shop around in different parts of the UK also has implications for other Scottish Government policies such as minimum alcohol pricing. If it really does cause huge spikes in the prices of certain types of drink, the obvious consequence seems to be a booming trade for English off-licences.
Beyond that, the Scottish Parliament acquiring serious tax-raising responsibilities ought to have a substantial impact on the future development of politics north of the border – one which may favour Labour and the Conservatives, two parties more used to battling on the politics of tax-and-spend.
Each will see opportunities in the SNP Budget. Richard Leonard, the new and rather left-wing Labour leader, will be able to attack the Nationalists for not going far enough – and hope to expose the hollowness of some of their progressive rhetoric. Only this morning we learn that the Greens, the SNP’s separatist allies, may force them to squeeze high earners even harder.
Ruth Davidson’s Tories, meanwhile, spy a crowbar they can use to start prying the SNP loose from so-called ‘middle Scotland’: those better-off voters who don’t favour independence but have grown used to voting for the Nationalists as an alternative to historically-dominant Labour.
Already the Conservatives are going to work, claiming that the SNP have breached their manifesto. With four years to press the attack and plenty of competitive SNP-facing seats after the 2016 Holyrood elections, the new, Tory-friendly tax dimension to Scottish politics gives Davidson more scope to build on her party’s strong performances in 2016 and 2017.