The Scottish Government should use existing devolved tax levers to reduce and prevent poverty, say campaigners
Reform also needed to better tax wealth and carbon to fund national priorities
The Scottish Government can use Holyrood’s tax powers to help increase the resources available next year and in future years, to support people on low incomes, invest in care and tackle the climate crisis, according to a group of prominent campaign organisations and a leading progressive think tank.
Ahead of the Scottish Budget on 15 December, the Poverty Alliance, CPAG in Scotland, Oxfam Scotland, the Scottish Women’s Budget Group, One Parent Families Scotland, and IPPR Scotland, say ministers should require a greater contribution from the better off to help alleviate funding pressures.
Soaring inflation and rising costs – including from public sector pay claims linked to the spiraling cost of living crisis – are exerting significant pressure on Scotland’s public finances. This pressure is likely to continue in the coming years, including as a result of a looming spending squeeze at UK level.
While Scottish ministers say their budget is “fixed” this financial year and have therefore made spending cuts and re-allocations to balance the books, this is not the case for 2023-24 when, the campaigners say, it must use devolved taxes to increase the resources available to it.
The organisations say this will help ‘minimise the damage’ caused by inflation to the public services which those on low incomes and women rely on most, and create scope to increase support to those on the lowest incomes, including accelerating progress towards ending child poverty.
They say the Scottish Government should use existing devolved taxes to generate as much revenue as possible for the Scottish Budget next year and kick-start reform, including to reform or replace the Council Tax and to assess what new taxes on wealth and carbon it could introduce.
With Scotland’s richest households having 217 times more wealth than the poorest, the organisations say that tax is a critical tool to build a just, compassionate and sustainable economy within a fairer society, and that a smaller gap between rich and poor will mean a happier, healthier, and more successful population. They say that the Scottish Government should listen to Scotland’s people, with nearly two-thirds saying they want increased taxation and spending on health, education and social security. Some 68% say that income should be redistributed from the better-off to those who are less well-off.
The call comes after Scotland’s Children’s Commissioner said that what he is “seeing and hearing” from children is “really terrifying” amid deepening poverty, and with surveys of unpaid carers and single parents showing the cost of living crisis is making the challenging financial pressures faced by many even worse.
The UK Committee on Climate Change says Scotland’s progress in cutting emissions has “largely stalled” with the legal targets “in danger of becoming meaningless”. All levers, including tax, should be used to make polluters pay to accelerate climate action and to drive behaviour change, with evidence showing that, on average, those with higher-incomes and wealth have disproportionately higher emissions.
Important tax levers, such as investment income tax, Capital Gains Tax, Corporation Tax and Inheritance Tax, are reserved to Westminster, but the Scottish Parliament has a range of tax powers the Scottish Government could use – including partial control over Income Tax and full control over local tax – to raise additional money, ensuring those with the highest incomes pay more and protecting those on the lowest.
Peter Kelly, Director, The Poverty Alliance, said: “For too long, our tax system simply hasn’t kept pace with Scotland’s growing inequality of wealth and income. People in poverty and low incomes in Scotland need urgent support. It’s time for the Scottish Government to use our tax powers in a progressive way, to raise the investment we need for the just and compassionate society that people believe in.
“Failing to meet that challenge will result in more cuts to the services that we all need, but that are an essential lifeline for those who need it most. We simply can’t allow that to happen.”
Satwat Rehman, Chief Executive of One Parent Families Scotland said: “It is vital that the Scottish Government raises taxes on the wealthy to support an increased investment in affordable housing, childcare and enhanced social security to eradicate poverty.
“Preventing and ending child poverty is not only essential for the life chances of the one in four children in Scotland living in poverty but is also the foundation stone of a healthier society and a stronger economy.”
Jamie Livingstone, Head of Oxfam Scotland, said: “This Budget must be a turning point on tax. Too many governments shy away from taxing high incomes and wealth, while making polluters pay, to reduce inequality and ensure a fair contribution by those who can most afford it: the Scottish Government cannot be one of them.
“It should make the common-sense choice to use existing devolved taxes to minimise the damage to next year’s Scottish Budget so it can boost help to those in poverty. But deeper tax reform is long overdue – and can no longer be delayed. The Scottish Government must kick-start the urgent reforms we need to tax wealth and carbon so that we can tackle inequality, invest in care and deliver climate justice.”
John Dickie, Director of Child Poverty Action Group (CPAG) in Scotland said:“Let there be no doubt, Scotland has the income and wealth to end the scandal of child poverty in our rich country. The Finance Secretary must now do the right thing and go further in using our tax, as well as our spending powers, to harness that income and that wealth, so that every family has the resources they need to give their children a decent start in life.
“In the current challenging climate that means increasing existing Scottish taxes progressively to boost the revenues available to deliver on child poverty plans, as well as urgently assessing what new taxes could be introduced with the powers Holyrood has.”
Sara Cowan, Coordinator, Scottish Women’s Budget Group, said: “Not only are women disproportionately impacted by the cost-of-living crisis, but government budget constraints will also impact on public services which women are more likely to rely on.
“Recent research shows how deepening poverty is leaving women with increasingly desperate decisions in order to support their families and themselves. Ensuring the Scottish Government has maximum available funds to invest in quality public services such as social care and childcare is essential.
“This budget offers an opportunity for Scotland to take further steps towards a more progressive tax system that tackles inequality and works for everyone.”
Philip Whyte, Director of IPPR Scotland said: “The Scottish Government has set itself a number of laudable and progressive ambitions – not least its stretching targets to tackle climate change and child poverty. Those are vital priorities and will need significant long-term investment to deliver. It is only right that those with the broadest shoulders bear the greatest responsibility.
“Given the ticking bomb of financial insecurity facing households, the Scottish Government must use its powers to boost household incomes now, while setting the groundwork for more fundamental tax reform to deliver on its long-term ambitions.”
For more information, or to arrange an interview, please contact: Natalie Terry, Media and Communications Advisor, Oxfam Scotland, email@example.com | (+44) 7906 139 293
Notes to Editors
- Scotland’s Children’s Commissioner, Bruce Adamson, gave evidence to the the Scottish Parliament’s Public Audit Committee on 10 November 2022
- On financial pressures facing unpaid carers – Carers Scotland, State of Caring 2022 (Nov 2022)
- On financial pressures facing single parents – OPFS, Living Without a Lifeline (2022)
- On climate emissions – the UK Climate Change Committee says progress on cutting emissions has “stalled” and that Scotland’s climate targets are “in danger of becoming meaningless”.
- Stop Climate Chaos Scotland has explored how policymakers can use fiscal measures to help accelerate and fund Scotland’s climate ambitions.
- Scottish Government’s Emergency Budget Review (2 Nov 2022)
- On public attitudes to tax – Scottish Social Attitudes Survey 2021 – 2022 (31 Oct 2022)
Read Oxfam Scotland’s briefing Time to Tax.