Scottish politics: Are you prepared to pay more tax for services?

Taxation? Don’t ask.

Public spending? Don’t expect an answer.

However, it would appear that our First Minister prefers an alternative approach. Purdah-lite. Or even purdah no more.

It seems that Humza Yousaf is not averse to floating a few fiscal notions to stimulate discourse. Running them up the flagpole to see who salutes – or sneers.

We should not be surprised. In a recent speech, he urged “a really honest conversation with the public” around pending decisions on tax and spending.

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Those decisions are, indeed, in the pipeline. Holyrood returns shortly, with the big event being the FM’s Programme for Government. He needs, he desperately needs, to make a significant and positive impact. Not least to divert attention from the many problems besetting his administration and his party.

But, in order to achieve that impact, he needs to talk money. He needs to reflect upon what will feature in the Scottish Budget statement, due later this year. There is, after all, little point in signalling grand ambitions – only to confess a few weeks later that the cash to implement such reforms is not available. Sorry, and all that – what am I like? Would only add to his difficulties.

So Humza Yousaf and his senior colleagues – notably Shona Robison and Neil Gray – are engaged in a tricky balancing act. Confront the negatives – but think in a positive fashion.

Those negatives are there for all to see, not least in the current report from the Scottish Fiscal Commission. They note drily, as is their wont, that spending intentions are potentially outpacing available funding, “presenting a challenge for the Government in setting the Budget in future years.”

One might call this the Micawber principle. You remember the droll Dickens character? Who declared: “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

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Politicians tend not to like misery. Such a downer for the voters. Hence the current discourse in Scotland.

Among various notions, the FM has spoken of income tax hikes, possibly focused upon higher earners. He has also floated the concept of curbing the universal provision of services in some instances.

I am told this is by no means a specific programme from the FM. These are not budget leaks from the top. Rather, Mr Yousaf is reflecting his distaste for purdah.

He is encouraging open debate, arising from contemporary realities. As one source put it to me, rather aptly, “public finances are in trouble – but then so are the public’s finances.”

We all, in short, have a story to tell, ideas to contribute.

Mr Yousaf stressed that “robust analysis” was under way within his government. Nothing is fixed thus far, especially as Scotland’s budget is linked to decisions taken by the Treasury.

One can expect continuing caution from Number 11. Only this week, the Chancellor said it was vital to stay the course “and continue to act responsibly with the public finances.” However, there are just one or two tiny signs that the very worst may be over, that the very bottom of the trough may have been reached.

Only tiny signs, though. The Scottish Fiscal Commission’s core verdict is still pertinent – to the effect that “economic activity remains muted”, despite dodging a technical recession.

Understandably, therefore, the business sector in Scotland remains decidedly apprehensive – although perhaps appreciative that key Ministers like Neil Gray have reached out to them. Regarding the Scottish Budget, the Scottish Retail Consortium urged Ministers to plug any deficit with spending constraint, rather than tax hikes which might hinder growth.

More broadly, a paper compiled by Sir Tom Hunter’s Foundation urged Scotland to seek to match Ireland’s relentless focus upon fostering enterprise.

Now, Nationalists will undoubtedly argue that, for example, his backing for a cut in Corporation Tax would be feasible in Scotland with independence.

Two points. As I understand it, the SNP has shelved its previous support for lower, competitive Corporation Tax.

And, secondly, arguing over that sidesteps the need to act now to support growth, within existing devolved powers. In which regard, I am told that the SNP Scottish Government, headed by Humza Yousaf, is acutely alert to the need to sustain and indeed grow the economy. They get it.

Indeed, that is the basis of Mr Yousaf’s slightly Delphic remarks. He wants the public – and economic stakeholders – to contemplate the challenges we currently face.

One senior source told me Ministers were well aware they could not simply tax their way out of a cost of living crisis, although tax could play a part.

They were alert to the argument that higher taxation on top earners might deter productive investment – while noting that there was little evidence that the tax changes to date had driven high earners out of Scotland.

Perhaps, though, we are at the tipping point. Which is one of the key factors to feature in the FM’s “robust analysis.”

One element drawn to my attention was that we are beginning to see some indications of real growth in wages, with a concomitant expectation of higher tax revenue. Again, that has to be measured carefully.

Right now, as things stand, I would not expect to see significant rises in Scottish income tax rates. That might, of course, change, depending on the outcome of the analysis.

Tax thresholds are a different matter. It has become almost standard to freeze the point at which earners enter higher rates. Folk can therefore expect to pay a bit more, as wages rise. And universal services? I do not see any retrenchment from existing policies. Tuition fees? Not a chance. Prescription charges? Behave yourself.

But perhaps there might be a degree of income-based selection in services which are due to be extended, such as the scope of free school meals.

Public debate awaits. Enjoy.