Service Tax challenge to council austerity budgets

by Calum Martin, Edinburgh South & Midlothian SSP Council chambers across Scotland must be echoing with the sound of grating steel this week, as one after another, council administrations have begun sharpening their axes. Cuts are coming.

In Edinburgh the fragility of the claims of Labour and SNP to be truly anti-austerity was revealed, as the Labour-SNP administration of the city council committed itself to some £22million pounds of cuts this year.

Some 1,200 council workers will lose jobs during these first rounds of cuts, and plans have been announced for a total of £67million worth of cuts by the end of 2018.

It’s not just Edinburgh. In the Highlands Local Authority, run by a coalition administration involving both Labour and the SNP, it was reported that almost 1000 council workers were set to have their jobs lost as the council considers some £64million worth of cuts.

Meanwhile the Labour majority administration of Glasgow City Council has forced through at least £28.9million of cuts. The list goes on. The length and breadth of Scotland the axes are falling. Yet both these parties have argued that setting and implementing austerity budgets doesn’t mean they’re not anti-austerity!

Indeed SNP councillor Alasdair Rankin, the finance leader for the Edinburgh City Council administration, even went so far as to argue that these cuts were in some way desirable, describing them as being aimed at building a “leaner, fitter and more agile” council, which would be more “user-friendly for residents and the business community”.

The reality? These cuts will continue to get worse. With most wage rates effectively stagnating—or worse, facing real term falls—already hard pressed families and individuals will find things getting worse, and as always seems to be the case under the austerity management of 21st century Scotland, it will be the most vulnerable in our communities who will be hardest hit.

At the end of the day, the SNP and Labour councillors have all broadly agreed on their story. They frequently appear arguing that a simple managerial exercise; that they have no option but to pass austerity budgets because of Holyrood. The problem with that is that they have both in turn been in charge at Holyrood!

Whilst we need more powers, Holyrood does already have the power to implement policies to not only avoid council austerity altogether, but to do so in a manner which fundamentally redistributes wealth from the rich to the poor in a progressive and equitable manner.

Whilst these parties perform their Punch-and-Judy routine attacking each other for cuts they themselves are complicit in, neither have ever made use of these powers to implement the measures necessary to avoid these cuts—and it doesn’t take a radical move to do so!

The Scottish Service Tax is the Scottish Socialist Party’s answer to the claims that nothing can be done to avoid these cuts. The proposition is simple, the case undeniable. Holyrood has full legislative power over Scottish local government, and that includes the Council Tax.

The SSP has consistently argued that Holyrood should scrap the council tax and replace it with a local income tax, based on six bandings.

The SSP has consistently argued that Holyrood should scrap the Council Tax and replace it with a local income tax – or ‘Scottish Service Tax’ – based on six bandings:

The first £0-£10,000 would go tax free
Income between £10,000 and £30,000 would be taxed at 4.5 per cent
Income between £30,000 and £40,000 would be taxed at 15 per cent
Income between £40,000 and £50,000 would be taxed at 18 per cent
Income between £50,000 and £90,000 would be taxed at 21 per cent
Income above £90,000 would be taxed at 23 per cent

For an example, on an income of £14,000 a year, the first £10,000 is under Band 1, so you would pay no tax on that. The following £4000 would be taxed at 4.5 per cent, under band 2, giving you a total bill of £180 each year under this example.

Under these proposals we would find that not only would the vast majority be either substantially better off, or at least no worse off in terms of tax burden—significantly improving the intended effect of the council tax freeze; but the total revenue raised nationally would be sufficient not only to avoid cuts, but to actively invest in the future of our public services.

There is a new SSP pamphlet currently being written with further information and statistics on the Scottish Service Tax.

Scottish Socialist Party MSPs and Local councillors never have and never will vote for a single cut. Moreover we can stand proud in a record of having consistently advocated clear and effective alternatives to austerity that remain well within the scope of the powers of Holyrood and of local councils.

Councillors are not meant to be elected to make cuts. Councillors are meant to stand up for our communities, not push them down. If you want to see the job local councillors are meant to do, just look at Jim Bollan, the SSP councillor in West Dunbartonshire and you’ll the difference a representative on our side can make: standing up with working people, to protect communities, not to attack them.

We have a clear alternative to austerity, and a clear way to deliver it. It’s time to challenge austerity not just at a Holyrood or Westminster, but also at home. No cuts. Not Now. Not Ever.

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