04/02/2016 Scotland 2016

The gloves are off as the debate over income tax heats up.

The battle lines are drawn as the First Minister comes under

pressure on income tax. The SNP and the Tories stood

shoulder to shoulder to impose hundreds and millions of cuts

A leading economist tells us Labour's tax proposal is progressive

but questions whether they could pay cash back to low earners.

And are young people losing out to pensioners?

The Scottish Poverty Tsar thinks they are.

MSPs got a stern telling off from the Presiding Officer earlier

today in one of the stormiest sessions of First Minister's

The subject that was getting everyone hot under the collar?

Whether a flat increase of a penny on the Scottish rate of income tax

would be a fair way of avoiding cuts to education and public services.

Scottish Labour and the Lib Dems say it would.

The SNP and the Conservatives are against a flat rise.

Can I suggest that members review the footage of First Minister's

Questions and consider whether they showed themselves and this

parliament in the best light? Let us just rewind. What happened to this

lunchtime? There is an issue that has got members mac going. Last

night Parliament voted against Labour and the Lib Dems big idea of

a penny on income tax. Today, the fallout. The SNP and the Tories

stood shoulder to shoulder to oppose hundreds of billions of pounds -- to

import hundreds of millions. I was following the advice of Kezia

Dugdale herself who last October said this, a feared Scotland is not

one where everyone pays more tax, we must stop tax rises on working

families. Faced with the choice of using the powers of this Parliament,

or hundreds of millions of pounds worth of cuts, why did the First

Minister choose austerity? Order. Tax rises on the lowest paid in the

society... Order. There is far too much shouting across the chamber.

Please let us hear the First Minister and Kezia Dugdale. Let me

remind you what Iain Gray told the people of Scotland before the

referendum. Scotland was independent then John Swinney would have to

increase taxes. Thanks to labour the Tories are in charge of our budget

and now we have Labour proposing an increase in taxes. They are an utter

disgrace. The Conservatives afforded with the SNP are against a tax rise.

The Scottish Conservatives wants to protect people's paycheques and

believe workers should not have 2p more than in the rest of the UK and

will also try to lower taxes when it is affordable. But the SNP alone

keep us guessing. No tax rises this year but who knows after that. The

Tories are going into this election also arguing for more tax on low

paid people because they are going to bring back prescription charges

for people on low pay. They are going to make people pay for their

own education. Let us -- it does not pretend... The First Minister was

not holding back with the leader of the Liberal Democrats. While the SNP

is imposing caps on schools and council services she has strong

armed councils into making the cuts with fines if they failed to be her.

She is refusing to use the income tax powers she now has. Frozen to

the spot. Incapable of protecting our once proud Scottish education

system. Having misled the Scottish people that the only way to avoid

tax rises was to vote no he now turns round and tells people they

have 2p higher taxes anyway. Willie Rennie should be utterly ashamed of

himself. He should be begging the Scottish people for forgiveness. And

look at this peer. The copy I of the persuading officer also. That is

just enough. And with a bit of a telling off members Mac left the

most lively first ministers questions in a while.

So who's right in the war of words about the fairness of adding a penny

One of Scotland's leading economists, Professor David Bell,

has spent the day crunching the numbers.

He's come to the conclusion that Labour's proposal is progressive.

The poorest 50% of households would barely be affected by a penny

increase, while the richest 10% would lose around ?700 a year.

However, he casts doubt on the ability of councils to pay

?100 cash back to those on low incomes.

A little earlier, I spoke to Professor Bell.

Both the SNP and the Greens claim that adding a penny to all rates of

income tax is not progressive but your figures suggest otherwise. Talk

me through them. We are looking at households. There are a lot of

households that do not really pay income tax at all so they are not

going to be affected. Among Pool A households there is almost no effect

at all. As you go up, richer and richer households, there is a bigger

effect, up to an average household in the top 10%, it is going to be

paying about ?700 more per year for the 1p increase in income tax. The

50% of Scots on the lowest income, who much of the burden is falling on

them? A relatively small amount. On average they are not going to be

paying more than ?50 per year. That group are either just over the

personal allowance, or they are not paying income tax at all, so they

are only paying a small proportion of the income window is a 1p

increase. As a proportion of household income the richest would

pay more of the income than the poorest. Is that what you describe

as progressive? Yes it is. The top 10% PE bigger proportion of the

income when the 1p rate is introduced. You considered the

Labour proposal with and without the ?100 cashback to those on lower

incomes. What difference does it make? It does not affect the bottom

group all that much at all because again they are not paying income tax

so they do not qualify for the ?100 cashback. It is mainly in the middle

of the income distribution. The top group are not affected much. It does

actually put proportionately more of the burden on the top 20% of the

income distribution in terms of who will pay the most. Do you think it

would be possible for councils to administer and make this cashback

would be possible for councils to payment of ?100 to those earning

under ?20,000 per year? I am not sure how that will work. Income tax

is the responsibility of HMRC, not councils. They would be a problem

getting information to the councils to administer that. Even if it was

possible I think they would be a lot of administrative problems. And

cost? And costs. The cost of setting up the system to do that. We know

how computer costs tend to balloon. I would expect it would be an

expensive exercise. Because Labour has argued that the mechanism is

already in place, mitigating the bedroom tax, it could be done in a

similar way. That is true. The benefits system, councils have

experience of council tax benefit and administering that. It is not a

tax in the sense of something owned by HMRC, it is owned by a different

ministry. So it is not clear to me that it would be straightforward to

make that transition. Overall, as a way of raising an extra ?475 million

to reinvest in education and public services what is your view of this

is a proposal? It is a plausible proposal. What we have done with our

model is to look at the arithmetic of who would be affected by the

changes in the tax. What we have not done is work out how people would

react. We do not know of people in the top band might choose to leave

Scotland, choose to incorporate themselves in court profits rather

than income. Those are unknowns. You have got to think about, while it is

good for revenue, there are also risks involved.

Joining me now in the studio to discuss this from the SNP

is Kenneth Gibson and from Scottish Labour,

The professor thinks the Labour proposal is progressive. Why is he

wrong? We heard evidence from a range of organisations from the

Scottish jade union Congress to the Federation of Small Businesses and

voluntary organisations and none of them thought that freezing tax was a

good idea because we want stability as we go towards 2017 and the new

powers. We produced a report on Friday of last week and the Labour

Party also supported the position that there should be no tax rise.

They have done a U-turn on their own position within one week. The

Scottish trade union Congress did not support it because workers have

below inflation pay rises and they needed a break and this was not the

time to raise taxes. The finance ready to evidence and all members

agreed unanimously that taxes should remain at the same as the UK level

and then labour can I put this gimmick, clearly thought out on the

back of a cigarette packet. It is already unravelling. Are you saying

this is written on the back of a cigarette packet? Certainly not. We

are putting forward a clear choice. You can forward the austerity

measures that the SNP has put forward, ?500 million of council

cuts, thousands of council workers facing the prospect of an appointed,

or you can look at the Labour Party approach which will protect public

services, invest in schools, give our young people hope. That is what

we should be using the powers of this Parliament for. Choosing the

referendum campaign Scottish Labour said that a vote for independence

would lead to higher taxes. Be only a year has gone by and you want to

put taxes up. Will the voters by this? It is about what you want to

use the powers of the Parliament for. Kenneth Gibson in last year's

Scottish Parliament urged his own Government to use the levers of the

parliament to tackle inequality yet this week we saw Kenneth and the SNP

standing shoulder to shoulder with the Tories to pass on George

Osborne's austerity package instead of supporting communities and

councils. That must have been uncomfortable to have been standing

in the same corner as the Scottish Conservatives. We are not standing

in the same corner as the Conservatives. At least this year we

have a policy, last year they did not. This is a choice. You are

choosing not to raise an extra 475 million. One of the things that the

Labour Party ignored in the debate is that our budget has been cut by

three 71 million. Last week again in the Finance Committee report,

paragraph 65, the Labour Party signed up, they opposed the SNP view

that this should be indexed per capita deduction methods. What that

would mean is 3000 ?500 million will be cut from the Scottish budget in

the next tenuous. That is austerity. Labour and the Tories will sit for

that one week ago and that will do more damage to the Scottish economy.

Talking about Scottish rate of income tax, the professor was clear,

he thinks the ?100 cashback is a bit of a nonstarter. You have not got

that through. I do not agree. It is not a nonstarter if you are on the

minimum wage and you would in effect from an additional ?81 per year. How

I councils going to administer this? Councils already administer council

tax payments. This is income tax. Discretionary housing payments. This

is about identifying names and addresses, identifying the payments,

a verification process and getting it to low paid workers. It is not

rocket science. It is about putting it to low paid workers. It is not

a robust computer system in place. It is about delivering these rebates

to low paid workers but it is also about protecting public services

from the savage cuts that the SNP and the Tories are proposing and

investing in schools and supporting teachers and young people.

James is talking about a new system with HMRC input. The rebate, it

would be at the end of the year. Anyone with the rebate... Litany of

excuses from the SNP It is not an excuse. Excuse me, please don't

interrupt me. In two hours yesterday, and tonight you were

unable to say how the system, which you came up with on Monday, because

you wanted to say something different, you have no idea how it

will work. That is the reality. Anyone looking at the systems know

that they take months or years to bed. In it is a gimmick.

James Kelly, Labour used the same argument against the SNP's penny for

Scotland in 1999, now that the SNP is using against Labour. Is there a

danger with both sides that the voters get exasperated? The

difference in 2003... 19 the 9. The Scottish budget was growing. At this

point in time, the Scottish budget is contracting. I hope by stage

three that Kenny Gibson and colleagues discorp a backbone. That

is what is needed to protect the jobs of council workers and to

protect public services. We are out of time. Thank you very

much for coming in. Thank you.

While we're on the subject of who should be paying more

and who should be paying less in times of austerity,

have pensioners been over-protected from spending cuts?

The Scottish Government's Poverty Tsar thinks they have,

at the expense of young people. And she also says its time

for a rethink on some of the government's popular -

but expensive - universal benefits like prescription charges.

Just before we came on air I spoke to Naomi Eisenstadt

from our Edinburgh studio. I began by asking her if the

Scottish government should do less for pensioners and more for the

young. I think that they do. But I do think

that the Scottish government is serious about tackling poverty.

You mentioned inheritance tax offers a clearer route to a fairer and more

just society. That will not go down well with older people? The tax

issue is toxic for most politicians. But talking about intergenerational

social mobility, there is no question that children who were born

to families where they own properties grow up with a kind of

security that children who are born to renters don't have.

Now part of that is reducing poverty so more people can own their own

homes but part is inheritance tax. But I'm not hopeful about that one.

I think it is a difficult one for the politicians. What sort of

response have you had from the government about it? Well, really,

it wasn't part of my proposals as I understand it is so difficult for

governments. It is deeply unpopular with the voters.

You believe in progressive taxation, earlier we heard from economist

Professor David Bell, saying a penny on income tax in Scotland could be a

progressive way of raising ?475 million. Is it worth consideration?

Of course I believe in progressive taxation, whether that change would

have the impact it would be needed, I don't think enough work is being

done. The fundamental principle is to pay for proper public services

you need income tax, property tax, and you need to have a thriving

economy. How you balance investment in getting a thriving economy so

people are in work and can pay taxes and what the rate of the taxes

should be is a very, very complicated issue.

You have come up with lots of ideas about the long-term but in the

short-term, nearly half a billion pounds extra could be targeted at

education and local services for younger people? I think that there

is up, one of the recommendations in my report is that we need to do a

lot more work in understanding what would work for young people. I think

yes a gap in knowledge on what policies would be best for young

people, 14 to 24. The reason I think this is important for Scotland in

the poverty debate is that Scotland has very generous free tuition fees,

great for the young people who have that ability to go on to university.

I think we should be thinking about what investment we should make in

less academic youngsters who tend to be from poorer back grounds. We

don't know enough about them in the way we know enough about the needs

of very young children. We have won the argument on under five but we

have don lots of research and testing on what work, we have not

here from young people from poorer back grounds. What could the

government look at doing differently for those younger people from poorer

back grounds? There must be better careers advice in school. Better

lingages between the schools and the local economy and local industrip.

If you talk to employers they say that they can't find people with the

right skills, well where is the link between the skills needed in the

economy and what is happening? Happening early in school from 14 to

15-year-old, it should not be left to the school leaving age.

Is it fair that so much is ploughed into free tuition fees? Perhaps it

is time to rethink that and divert the money to people from poorer back

grounds? I have thought that a lot if I felt certain that the money was

diverted in that way. But usually when the government takes something

away, the savings goes into a general pot and everybody has a go.

So I don't think that change is due until we understand what it takes

for the other 50% of young people. What it would take for the nine

universities, I don't know the cost for a new system, until you

understand that, there is no point in saying take the money from here

and put it there. OK. Naomi Eisenstadt. Thank you very

much. Thank you very much.

Joining me now to discuss some of the day's news are Cat Boyd,

a candidate for RISE, Scotland's left wing alliance.

And the Daily Record's political editor, David Clegg.

Welcome to you both. Let's kick off with the comments

from Professor Bell in the programme, that he thinks that

Labour's proposed penny on income tax is progressive. David do you

think that is a problem for the SNP? I think that the problem is that

most experts think it progressive and people looking at the detail

feel it is progressive. But it does not mean it will translate into an

electoral problem for the SNP. They are doing well in the polls.

Scottish Labour have problems earning a hearing from the Scottish

people. But it does make the SNPs desire to present themselves as

anti-austerity difficult when they are ridiculing the idea despite the

weight of academics suggesting it could be a way to help people who

need the help. Difficult when it was an idea that

they proposed once? You but it was a long time ago. I think that the real

issue is going to be that they have spent a long time, a lot of time in

the last couple of years as an alternative to austerity, pitching

themselves that way. But when it comes down to doing something that

could help, they don't seem to want to do that in case it scares off the

middle-class voter base. We saw a bad tempered FMQs but do

you think that the strategy of painting the SNP into the same

corner as the Conservatives could be successful? No, it did not look

great today. But in a way, the SNP and Labour are right on this to take

a stand against Tory austerity and have a discussion about making sure

that the poorest do not shoulder the burden. That is why many of us

campaigned for independence at the end of the day. Since 1979 we have

seen a global consensus that there will be tax cuts for the rich and

falling wages for the workers. It is a good thing to have a discussion

about progressive taxation. Do you think there will be sympathy

among the public for the local authorities stuck with a Council Tax

raise? There is nothing that they can do to mitigate the spending

cuts. Do you think that they may be willing to pay more in tax if it is

clear what the money is spent on? The political orthodoxy is not to go

into an election to raise taxes. I think we are at an unusual moment,

where there has been many sustained years of cuts to public services,

that there is a developing idea amongst the public that this can't

go on like this, the councils cannot take it anymore, the local services

cannot take it, we need money into the system and taxation is how to do

it. Coming to that conclusion, that is one thing, you then take the next

step of saying: I'm willing to pay extra tax myself, that is the

question. However, I do I think that the point is that it is a policy

that is not being designed by a party that expects to stay in

government, they are looking at it not thinking it will be labour. So

no-one is expecting it to be introduced by SNP.

On raising taxes, RISE are a party saying that we will raise tax on the

top 1% of Scotland. The rich need to pay more.

To 06%? Yes, a 60 pence tax rate is fair to protect public services.

You think that people will vote for that? It is easy to vote for other

people to pay tax, is the argument? This is about fairness, justice.

Workers' wages are falling. That is ongoing. We shouldn't have to make

poor workers pay more tax. There are four billionaires in Scotland that

own more than the 20% bottom Scots. This is what RISE is promising to

do, to redress the balance. It was said that the Incampaign

would win by a substantial majority, that the TV debates were beyond his

pay wage. Nigel Farage said he may be in for a

shock? There is a poll from YouGov in the morning. Showing that the

leave is well ahead. I think that parallels between the Scottish

referendum and the EU referendum are drawn out. But we should look at the

fact that the polls narrowed. The change proposition made up ground

over the period of the referendum. The momentum at the minute feels

with the Leave campaign. There are some disadvantages, there is not a

political figure backing it, they will face the project fair style

political figure backing it, they big business to come out against it

and heavy artillery unleashed on it before voting day. But I expect the

polls to be close. And is there complacency with the

SNPs saying a new poll showing strong support for the EU, 44% is

that strong? I think that the Incampaign is complacent. There is

an assumption that left-wing people in Scotland and Wales will vote to

stay with the EU as we all hate Nigel Farage. There is the

assumption that people vote to stay with Europe on that basis but the

issue is that every time I hear about David Cameron and Europe, he

is off negotiating terms that are about cuts, privatisation, curbs on

people being able to come here to work and live. That is not the type

of Europe I want to live in. I might vote to stay but not with any

particular joy. Lord Rose's comments came as MPs

were debating UK sovereignty in the Commons. It is understood that

Number Ten is looking at introducing a sovereignty bill. How will that

play in Scotland? I don't know if people will pay much attention to

it. I think it is a thing that is striking, the EU referendum debate

is not so prominent. striking, the EU referendum debate

is not so prominent. That's it for tonight

and for this week. Thanks for watching.

We leave you with Pete Wish art, who revealed their ambition to represent

We leave you with Pete Wish art, who themselves at this year's UK

Eurovision. # I can't stand it

# Romeo and Juliet and Juliet # Should have banned it

# All of the things I said # I was only pretending

# It's a game # Love, it's just a foolish

# Love is a foolish # Slav a foolish game.

Tonight, a special programme on Trident -

our nuclear weapon of choice.