Labour’s Taxing Problems: The Party is fighting for its very existence

Gerry Hassan

Sunday Mail, February 7th 2016

This week Scottish Labour made a move on tax. Is it a daring or desperate move?

It broke with the party’s position since the Scottish Parliament was set up in 1999 not to propose any tax increases. At the same time, as the SNP retained its stratospheric poll ratings for the May elections, the Tories drew level with Labour for second place, while Labour issued their regional list candidates with an obvious lack of ‘new blood’ or talent.

With the Scottish Parliament gaining more taxation powers now and in the near-future, Labour have decided, along with the Lib Dems, to break ranks, in arguing for an increase of one penny in income tax.

Even the Tories have had a Tax Commission which wants to introduce a new 30p band in-between the 20p and 40p bands. This failed on the first hurdle of what it was meant to be for: tax neutrality, increases or decreases.

This leaves the SNP as the uncomfortable party of no change Scotland – something paradoxical for the party of independence and John Swinney’s ‘a penny for Scotland’ in 1999.

Kezia Dugdale and Labour have moved to differentiate from the SNP. Whereas in the 2011 election the party moved in the opposite direction – at the last minute embracing the SNP’s council tax freeze – to try and neutralise SNP popular policies. They are trying to outflank the SNP from the left.

This raises two problems. The first is that on education, health and local government, Labour and SNP share the same broad terrain. Both despite rhetoric are parties of greater centralisation and accruing powers to the Scottish Parliament within Scotland and from Westminster.

Second, if Labour and SNP sit in the same political space, what on earth does Labour stand for? Opposing Tory austerity, being pro-living wage and against Trident, are issues both Labour and SNP claim to champion.

Few people can give any kind of answer to the question: what does Scottish Labour stand for beyond the most vague platitudes. Indeed, for the moment, Nicola Sturgeon’s SNP inhabit Labour’s traditional ground and values more convincingly.

There is Labour desperation: of chasing after the working class, left-wing vote who abandoned the party last year after voting Yes in the indyref. It negates Labour’s basis for success in the 1980s and 1990s: building an inclusive ‘Big Tent’ which includes significant middle class and unionist support. It is a move the Conservatives see as an opportunity to make a pitch for that vote.

Scottish Labour has opened up space between it and British Labour. However, given the chaos of the Corbyn led Westminster party, this small distinction may count for less, against that bigger picture.

Scotland does need to start thinking about tax. But rather like Johann Lamont’s ill-fated ‘something for nothing’ speech in 2012, Labour cannot just make isolated statements and hope the political ground will change.

Talking about tax requires preparation, strategy and long-term signaling – none of which Lamont or Dugdale have shown interest in undertaking. There is majority support for raising income tax (53%), and council tax (54%), but translating this into votes depends on the proposals and who is proposing them.

Taxation is about more than income tax, a declining part of the tax take, and varying the basic rate. There are wider issues of mood music, the direction of a society, and huge issues of tax avoidance and evasion. There is the small concern of whose interests the Treasury and HRMC are looking after: the taxpayers or big corporations. It isn’t an accident that six of the biggest companies in the UK pay no corporation tax.

How Scotland mitigates public spending cuts has to be about more than income tax. There is a need to end the council tax freeze – now in its ninth year. Post-election local government finance has to be addressed in a country which hasn’t dared undertake a property revaluation in the last 25 years, because our politicians are scared of vocal middle class people being asked to pay more.

The SNP like David Cameron are in awe of the success of the New Labour project at its peak. Yet, John Swinney hasn’t learned that one of the big lessons is to mark out long-term intent on public spending, as Gordon Brown did as Chancellor when he made the case for extra taxation via National Insurance to fund the NHS.

Neither have Kezia Dugdale and Scottish Labour who are sadly left thrashing about trying to strike a distinctive pose in an election they have already written off.

Scottish Labour is fighting for its very existence and Kezia Dugdale knows it. She has to win a hearing from voters who have switched off after a succession of disastrous Labour leaders. She has to show the patient is alive, has a pulse, and a will to live. And like Labour in the 1980s she knows the margin between immediate success (or what counts as success: i.e.: surviving) and failure may well be narrow, for if the party finish third, there may well be no way back.