Scotland’s Labour leader hopefuls go head to head over top tax rate

28 Oct

Richard Leonard, the Corbynite challenger for the Scottish Labour leadership, has been accused by his rival Anas Sarwar of “shouting about being radical” but offering too little detail in his policy manifesto.

In what appeared to be a direct response to Sarwar’s own more detailed and costed tax policies, released earlier this week, Leonard called for a “once-in-a-generation discussion” about taxation in Scotland as he launched his proposals on Friday afternoon.

Borrowing the language of Jeremy Corbyn, the “manifesto for real change” proposes two additional tax bands for those earning over £70,000 and over £100,000, but did not suggest how they would be weighted. It also puts forward a 1% windfall tax on the wealthiest 10%, defined – using Scottish government indicators – as those with an estimated wealth of over £1m. Leonard believes that this alone could raise an additional £3.7bn of revenue.

Doubts were subsequently raised about whether a windfall tax comes under the tax powers presently devolved to Holyrood under the 2016 Scotland Act, with the Scottish government confirming that it would require further consent from the UK government.

A spokesperson for Sarwar’s team said: “This rushed job means there are a lot of words, but next to no detail. It is simply not credible to shout about being radical while failing to produce any new radical policies or explain how you would pay for them.”

Sarwar himself has proposed a 50p top income tax rate for all those earning more than £100,000 – far steeper than Scottish Labour’s established plans for those earning £150,000 plus – in what was seen as a bid to outflank Leonard from the left. In addition to a penny rise for all those earning more than £28,000, Sarwar argued that the £700m raised would fund a reversal of Tory disability benefit cuts in Scotland, a means-tested £10-a-week child tax credit to 275,000 families and higher public sector pay.

Launching his own proposals, Leonard insisted that he would not be looking at income tax in isolation, saying: “We must tackle endemic low pay in the economy, specifically by rolling out the Scottish Living Wage and moving towards a secure, full employment, high wage, high value economy, and by promoting trade union organisation and collective bargaining in general, including sectoral bargaining.”

Voting has opened in the contest which was triggered by the unexpected resignation of former leader Kezia Dugdale at the end of August and will run until 17 November, with the winner announced the following day.

The new leader will have to engage immediately with the debate around tax for November’s draft budget. Nicola Sturgeon, the first minister, has indicated that her government will pursue tax rises for the better off in order to fund its manifesto pledges, including raising public sector pay. Scottish Labour, the Scottish Liberal Democrats and the Greens have all called for a new top rate of income tax of at least 50p. A discussion paper analysing the new tax system and opposition parties’ proposals will be published by the Scottish government next week.

The Scottish Greens have already indicated that they will only support the minority SNP government’s budget if it meets their demands for an above-inflation public sector pay rise fully funded through tax rises for the wealthiest.

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