Tax Dominates First Scottish Leaders Debate

25 March 2016, 07:13

Clashes over tax dominated the first TV leaders debate, as Nicola Sturgeon said she thought the top rate for income tax should be set at 50p, but feared it could cost Scotland millions in lost revenue.

The SNP leader and First Minister argued a failure to devolve powers to tackle tax avoidance alongside new controls coming to MSPs over income tax created a barrier to restoring the 50p rate in Scotland alone.

Ms Sturgeon has previously said she was in favour of increasing the levy on those earning £150,000 a year or more, but has now ruled out such a move for the first year that ministers at Holyrood have control over the levy.

From April 2017 the Scottish Parliament will have the ability to set income tax rates and bands, making the issue key in the run up to the May 5 election.

Labour leader Kezia Dugdale said her party would up the top rate in Scotland to 50p.

She told the BBC Scottish Leaders Debate: "We would ask the richest to pay a bit more, ask those people who earn £150,000 a year to pay a 50p rate.

"Something Nicola Sturgeon used to stand for is something the Labour Party will do.''

When asked if she would like to see the return of the 50p tax band, Ms Sturgeon said: "I think there should be a 50p top rate of tax but you don't set tax rates if it is going to lose you money. I don't want to turn around in two years time and say we've got less money to spend on our health service.''

She said the SNP had ruled this out for the first year the new powers are in place, but added: "I haven't ruled it out for the rest of the parliament.''

If just 7% of the 17,000 tax payers earning £150,000 a year or more were to move out of Scotland, Ms Sturgeon has said the loss in revenue could amount to £30 million a year.

She told the debate: "Why is that the case, because under devolution, unlike under independence, we will get the power to set the tax rate but we don't get the power to set the rules of avoidance.

"I would ask, if I'm re-elected, ask the First Minister's council of economic advisers to look at this on an annual basis to see if we can find ways of mitigating that risk and we will judge it in our budget every year.''

She insisted the SNP tax proposals, which include an increase in the personal allowance to £12,750 and a freeze on the basic rate of income tax for the five years of the next Parliament, are ``fair, progressive and balanced''.

"We don't want to raise the basic rate of income tax because 2.2 million people struggling to make ends meet shouldn't pay the price of Tory austerity,'' Ms Sturgeon said.

Instead she said the SNP would "ask the 10% of highest earners to shoulder a bit more of the burden'' by not following Chancellor George Osborne's policy of increasing the threshold for the 40p tax rate.

The First Minister argued: "We don't think it is right to do what George Osborne is planning to do which is give a very large tax cut to the best off in our society.''

Ms Sturgeon insisted these income tax plans, together with changes to the council tax system which would see those in the most expensive homes pay more, would raise #2 billion a year.

But Ms Dugdale said: "It won't be enough to stop the cuts, it's not enough to end austerity.''

Labour want to put 1p on the basic rate of income tax in Scotland, with Ms Dugdale arguing: "If we did that we could raise enough money to stop the cuts, make different choices from the Tories.''

Scottish Conservative leader Ruth Davidson hit out at her rivals and said: "We've got the First Minister of Scotland saying she wants to make Scotland the highest taxed part of the UK and then we've got the leader of the opposition saying that's not enough, we need to take more money off working Scots.''

She stated: "We have an absolute principle - we don't think the people of Scotland should have to pay more tax than the rest of the UK and we don't think it's good for Scotland either.

"Hanging a sign at the border that says 'higher taxes here' encourages neither the growth, the investment or the jobs that we need to properly fund our public services.''

Ms Sturgeon hit back: "You want to restore prescription charges and you want to charge people to go to university, that's Tory policy in this election.''

Liberal Democrats also want to increase the basic rate of income tax in Scotland by 1p, with leader Willie Rennie saying the #475 million this would raise would fund a "transformational investment in education''.

He told the audience, at BBC Scotland's Glasgow headquarters: "I would not ask for this investment if it wasn't incredibly important, not just to give kids the chance in life that they deserve but also to get the economy working again. We've got huge skills gaps in the economy, we need to make that investment to have that transformational change.''

Scottish Green co-convener Patrick Harvie said his party would set out its detailed tax plans next week, but stressed Scotland needs ``to be ready to scrap the council tax''.

He added: "We certainly need to raise the revenue that we need to prevent the cuts.''

With polls in the run up to the Holyrood election showing the SNP on track to form a second majority government, Ms Davidson argued there was a vacancy for a strong opposition.

The Tory leader told the audience: ``What you're all going to be asked to do on May 5 is decide who is going to be the government in this country and who is going to be the opposition.

"What we've got at the moment is somebody saying 'let's whack up taxes' and someone saying 'let's whack them up even higher'. Wouldn't it be good to have somebody in there saying let's drag this country and this parliament back to the centre, not ever leftwards?''

Ms Dugdale insisted: "It's not opposition I want to be in, it's Nicola's desk I want, I want to serve this country as First Minister.''

Ms Sturgeon told her Labour rival: "You can have the desk, you're just not getting the job.''

The hour long debate also saw heated clashes over fracking, with Mr Rennie coming under pressure to explain a recent "flip flop'' in policy by the Lib Dems.

The party's Scottish conference voted to lift the moratorium that is currently in place, preventing unconventional oil and gas extraction in Scotland, but this was over-ruled just days later.

Mr Rennie said: "I'm the leader of the party, I've set the policy. I don't want to advance carbon based technologies in energy generation any more than we are doing just now. I want to invest in renewables, I want to meet our climate change targets.''

He insisted that the Liberal Democrat manifesto for the election "will be clear we are not in favour of fracking''.

Ms Dugdale also ruled out fracking if Labour wins the election, arguing: "I think people at home expect politicians to follow the evidence, follow the science, and the science tells us the last thing we need when we face climate change is another fossil fuel.

"So now we have the power in Scotland to ban fracking the Labour Party would use it - no ifs no buts, no fracking with Scottish Labour.''

For the Greens Mr Harvie was also clear that "fracking is an absolute no from the Greens'' as he said the challenge was to ``invest in the alternatives'' to fossil fuels

"We've got far more fossil fuels in the ground globally than we can ever afford to burn so we need to be investing in the alternatives,'' he stated.

While the Scottish Government brought in the moratorium against fracking last year, Ms Sturgeon has come under pressure to rule it out completely.

She said: "My view is unless it can be proved beyond any doubt that fracking doesn't harm our environment, doesn't harm our health, doesn't harm our communities, then no, fracking shouldn't be allowed in Scotland ever at all.''

Ms Davidson said local authorities should be able to decide whether to give the go ahead to such projects or not, but stated: "We think we should have a mixed energy policy and that involves non-traditional gas extraction.''

Meanwhile UK Independence Party MEP David Coburn warned a reliance on renewable energy would see Scotland "wait for the lights to go off in the not too distant future''

He told the debate: "We've got a lot of cheap coal underneath us and a lot of cheap oil, let's use it. I don't see why we should have expensive energy that pensioners can't afford.''