Wednesday, 26 November 2014

50p or not 50p? That is the question

Murphy: I'll have half of that thanks
Tax is in the air.

George Osborne's autumn statement is just around the corner, and born-again devolutionist Jim Murphy is suddenly in favour of Holyrood controlling income tax.

Murphy is equally enthusiastic about restoring the 50p top rate of income tax for those earning £150,000 and above, thereby reversing the cut to 45p made by Osborne in April last year.

The chatter about the 50p rate reminded me of a protracted exchange I had with Nicola Sturgeon on the subject during the referendum campaign.

It was probably the stickiest moment in an interview for the Sunday Herald, with the future First Minister repeatedly ducking questions on whether to bring back the 50p rate.

Here's the transcript from the first week of September

Sunday Herald: Do you not want a more progressive tax system?

Nicola Sturgeon: Parties will take decisions in budgets about taxation. What I want to do is see a situation where we are lifting people at the bottom, being able to determine what the minimum wage is, being able to determine what I hope and lift the minimum wage to the level of the minimum wage, childcare. Being in charge of both sides of your balance sheet so that socially progressive policies -

SH: You’re not talking about both sides, just spending-

NS: -socially progressive policies that you invest in have a positive impact on the other side of your balance sheet. We have a debate in this country about taxation that assumes the only way you can increase a government’s tax take is to raise the rates of tax that people pay. That’s not the only way. You increase a government’s tax take if you get more folk in work paying tax, if you get more folk in work earning more and paying more tax. It doesn’t happen instantaneously, but that’s what you’ve got the ability to do if you are in control.

SH: But there’s an argument about fairness, that says those who earn most should pay more

NS: If we’d have been in control we wouldn’t have reduced the 50p top rate of tax

SH: Would you reintroduce it as Labour would?

NS: I know why people want answers but...

SH: If you can give a commitment on [a 3p cut in] corporation tax why can’t you make one on income tax?

NS: We’ve set out our position on income tax. That decision will be taken on prevailing circumstances

SH: And the corporation tax decision?

NS: Corporation tax is a deliberately targeted policy to try to create more jobs through having more companies based in Scotland. On income tax, if there was an SNP government in an independent Scotland setting that first budget, if the circumstances were the same as they are now, we wouldn’t have reduced the 50p top rate of tax

SH: But would you have a 50p top rate of tax?

NS: I’m not going to set income tax rates for 2016 sitting in September 2014

SH: Do you think it’s a good idea for fairness?

NS: Right now we wouldn’t have voted, we didn’t vote, to reduce it. So, then, right now, we think there should still be a 50p top rate of tax

SH: There will still be people earning over 150 grand in 2016. Do you think they ought to pay 50p on their income tax?

NS: You set income tax rates based on the judgments you take about your budget when you set those budgets. I’m not going to sit here..

SH: You also take a judgment on whether those people ought to pay more. Would they deserve to pay more?

NS: I’m not going to.. You can spend the rest of the interview..

SH: You talk about social justice but you won’t..
Sturgeon: I'll tell you when I'm ready

NS: You can spend the rest of this interview if you want asking me to tell you what an SNP government’s budget would be in an independent Scotland in 2016

SH: No, I’m asking you about one rate of one tax

NS: I’m giving you an answer. If I was making that decision right now there would be a 50p top rate of tax. I’m not going to tell you what the decision will be two years from now because that decision will be taken based on the prevailing circumstances. If we were in that position right now of making that decision then there would still be a 50p top rate of tax, because we think that would be correction the circumstances that we’re in just now.

SH: But the same basic question still exists in 2016 - should the rich pay more?

NS: There will be a whole variety of circumstances by the time we’re setting that first budget

SH: That’s a fundamental question for taxation. Should the rich people pay more money?

NS: I believe in progressive taxation. I believe that people should pay according to their means. But the specific rates of tax will be decided in budgets. I’m telling you now that if that decision was ours to make right now what that decision would be.

No comments:

Post a Comment