Tax cut general election: A headache for Yousaf and Robison

There was a slightly awkward moment on the BBC’s Good Morning Scotland on Thursday when host Laura Maxwell was accused of hating democracy.

The charge came from Richard Tice, the leader of Reform, after the journalist asked him about his pledge to stand a candidate in every seat in the UK at the next General Election.

She, quite reasonably, wondered if it was a good use of his party’s resources to have someone in all 57 Scottish constituencies.

Given that they only managed 0.2% of the vote at the last Holyrood election – despite having a relatively high-profile MSP as their leader in Scotland –  it does seem a tad ambitious.

I’m not convinced they’ll even have enough candidates to stand in all seats. They only managed 15 at the 2019 election when they were still the Brexit Party under the leadership of Nigel Farage.

But a promise is a promise, and if Richard Tice loves democracy as much as he thinks Laura Maxwell hates it, I look forward to getting to know his Westminster hopefuls. And I’m sure the Treasury looks forward to the £28,500 in lost deposits.

At least now it looks as if he has some time to get his troops in place, with Rishi Sunak telling journalists his “working assumption” was that he would wait until “the second half of this year” before asking the King to dissolve parliament.

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You can clearly drive a bus through the caveats in that comment, but an Autumn/early Winter election seems to confirm what a number of others in Westminster had expected.

Some suggestion it could come on October 10, the day before the Tattie Holidays, or on November 14 or 21.

He will obviously go to the country at the time that’s optimal for his party.

Which means the question isn’t really one of when, but one of definition: what does optimal mean for the Tories in 2024?

Given that the last ten polls have given Labour an average poll lead of 17 percentage points, optimal might be anything less than total annihilation.

What could help him is if Jeremy Hunt pulls out a stonking great big rabbit at the budget in March.

The Chancellor is under pressure to make changes to income tax, either by unfreezing the thresholds at which earners become liable for the basic and higher rates or by lobbing a penny or two off the basic rate.

The scale of annihilation for the Tories could be dependent on the decisions Chancellor Jeremy Hunt makes in his March budget (Image: Newsquest)
If there is a big pre-election giveaway, how then does the Scottish Government react?

Shona Robison set out her tax and spending plans last month. If passed by MSPs, they will see Scottish workers on £28,867 and above pay more compared to the rest of the UK.

The 45% rate introduced by the Finance Secretary means Scots earning between £75,000 and £125,140 will pay up to £5,231.81 more than someone on the same salary in other parts of the UK in 2024/25.

If Jeremy Hunt does change income tax in a bid to woo back supporters then the divergence will increase.

While under the fiscal framework, this will mean a bump in the block grant for Scottish ministers, it ultimately leaves them with a headache.

If they don’t respond then the gap between what high earners here pay and what high earners down there pay grows.

Humza Yousaf has already said that if that “divergence grows too wide” then there “could be behavioural impacts as a result."

But if they want to change that they have very little time to do so.

When Shona Robison was asked about this last month, just hours after her budget, she said it would be next to impossible.

“We will take those decisions at the time should that issue arise. But the marker I would put down at the moment is it would be outrageous given they know our timetable and the timetable would not allow really for a reconsideration of tax plans even if we wanted to.”

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However, the Chartered Institute of Taxation says it is possible, but really, really difficult.

Scottish income tax policy has to be confirmed in a Scottish Rate Resolution and cannot be changed once the new tax year starts.

That means any change would need to be costed, debated and approved by April 6, a month after the March budget.

Possible, but really, really difficult.

Regardless of when Rishi Sunak eventually goes to the palace, the election campaign is already underway, and democracy lovers everywhere are faced with difficult decisions.