Budget a missed opportunity to tackle poverty

Scottish parliament

Charities say tax powers could have been used to combat deprivation

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15th December 2016 by Graham Martin 0 Comments

The Scottish budget marks a massive missed opportunity to combat poverty, say charities..

Finance secretary Derek MacKay unveiled what had been trailed as a “historic” package as it represented the first time the Scottish Parliament has had the power to set income tax rates.

Among the headline announcements were £304 million in funding for the NHS, which is £120m above inflation and £120m to close the attainment gap in 2017-18 - £20m more than previously announced.

However, those looking for cash generation through a bold use of income tax were disappointed.

The Poverty Alliance said more could have been done - as did the Scottish Council for Voluntary Organisations (SCVO).

John Downie, director of public affairs at SCVO, said: “With the economy sluggish, inflation set to rise, social security payments to fall in real terms and the full effects of Brexit yet to kick in, we have grave concerns that there will be trouble ahead for many of Scotland’s most disadvantaged communities.

“Despite encouraging rhetoric from the Scottish Government about tackling inequality, protecting human rights and pursuing real community empowerment, this budget is a missed opportunity with a focus on statutory services.

“The Scottish Government should have directly funded the third sector to help deliver better outcomes, help communities become more resilient and empower citizens to shape and take decisions that affect them.

“Despite the lack of clarity around council funding, the reality is this outcome will inevitably lead to a further reduction in funding available to the third sector via local authorities – hampering our ability to pursue more innovative, preventative and effective approaches.”

Poverty Alliance director Peter Kelly said: “It is disappointing that the Scottish Government has decided not to make full use of the tax powers at their disposal. 

“We are pleased that the Scottish Government has decided not to embrace the tax cutting agenda that has been adopted by the UK government. With almost 20% of the lowest earning adults currently pay no tax, there was little to be gained from changes to the personal allowance. However, we need to look at how we can use our tax powers to make a real impact on inequality. In this respect, the budget is a missed opportunity. 

“Research by David Eiser calculated that for an individual earning £300,000, a 5p rise in the Additional Rate would cost around £7,500. This shows how we can raise taxes to address inequality without the threat of creating Scottish tax exiles. 

“The Scottish Government should also give serious consideration as to how we fund local authorities, and this includes looking again at council tax. 

“The current system of council tax is regressive, particularly for those on a low income, and this must be looked at again if we are to build a fairer Scotland. 

“Reducing Air Passenger Tax while announcing cuts to local authority budgets brings no benefits to those on the lowest incomes. 

“With almost one million people in Scotland living in poverty, and unemployment rising, there has never been more need for strong action from the Scottish Government.” 

Mackay said: “I have published a budget for growth and public services; for our environment and our communities. It delivers increased investment in education, record investment in the NHS, protects low income households from tax hikes and supports more and better jobs. 

“This budget provides support for the economy, for jobs and for household incomes, through a fair and balanced set of tax and spending proposals.

“Closing the attainment gap, reducing child poverty and ensuring equality of access to higher education, will generate long term benefits for our economy and public finances.”