ALLIANCE back calls for fair changes to taxation in Scotland

Changes to build a fairer tax system in Scotland could boost spending on key national priorities by hundreds of millions per year

The ALLIANCE have joined with 51 other organisations across Scotland, including anti-poverty organisations, the wider third sector, and trade unions, to call on the Scottish Government to deliver on commitments to explore income and wealth tax reforms ahead of the next Scottish Budget.

In a new briefing, ‘The case for fair tax reform in Scotland‘, IPPR Scotland, Oxfam Scotland, the Poverty Alliance, CPAG in Scotland, the Scottish Women’s Budget Group, One Parent Families Scotland and the Wellbeing Economy Alliance Scotland lay out a series of progressive options to reform the Scottish tax system using devolved powers.

The briefing urges the First Minister to use Scotland’s existing tax levers, such as the Scottish Rate of Income Tax, more progressively in the Scottish Budget for 2024-25. It also calls on Humza Yousaf to kickstart long overdue tax reform and highlights a series of options that should be considered with modelling suggesting that each of them could raise hundreds of millions of pounds annually in extra revenue.

The extra revenue could fund public services while boosting progress towards the Scottish Government’s legally binding targets to reduce child poverty and climate emissions, and accelerate commitments to boost spending on care and childcare, tackle gender inequality and realise human rights. 

While some of the options would take time to implement – and behaviour change may somewhat diminish the revenues – modelling by IPPR Scotland estimates that:

• Up to £260 million more could be raised in 2024-25 by introducing an additional 45 per cent rate on earnings above £58,285 – earnings that would put someone in the 90th percentile for full-time gross earnings in Scotland.
• £350 million more could be raised by replacing the existing Council Tax with a new percentage of value tax set at 0.75 per cent of a home’s value.
• £300 million more could be raised through a local inheritance tax charged on estates worth between £36,000 and £325,000 that do not pay UK-wide inheritance tax.
• £600 million more could be raised by a new local payroll tax on low pay employers.

Ruth Boyle, Policy and Campaigns Manager at the Poverty Alliance, one of the key partners in developing the briefing, said:

“A just and compassionate Scotland is one with strong, sustained social investment to end the injustice of poverty, and to make sure that everyone has the chance to develop their potential. We are one of the wealthiest countries in the world, and the Scottish Government can use progressive taxation to put that wealth to good use. People in poverty and struggling on low incomes can no longer wait.”

In addition to the positions outlined in the briefing, the ALLIANCE continue to advocate for applying the principles of human rights budget work within the Scottish Budget. Decisions on public spending have an enormous impact on individuals rights and wellbeing, and it is important that the process for arriving at those decisions appropriately considers the impact on rights.

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