The supporters of austerity economics constantly talk about hard choices and the need to create a low tax economy. This is intended to drive us to a US style small state with only safety net public services.
The Reid Foundation has helpfully modelled an alternative approach to tax that emphasises growing the tax base, not simply increasing tax rates. Ed Miliband has discussed a similar approach under the heading of 'predistribution'. There has been a predictable right-wing reaction to this from the usual suspects in Scotland.
Robin McAlpine has set out a useful rebuttal of their criticism in today's Scotsman. He argues "And yet the reality is that we have a chronic low-pay economy which destabilises the tax base and leaves the public paying billions of pounds to subsidise in-work poverty. Only one in five Scots earns between £25,000 and £35,000. Three out of five earn less; half less than £21,000. The Reid Foundation has modelled what would happen to Scotland’s finances if we had a labour market comparable to other economies at our state of development. If we moved even relatively modest numbers of people out of low pay into medium pay and reduced unemployment we could increase the tax take by over 30 per cent without raising tax rates at all."
This argument supports UNISON campaigns such as the Scottish Living Wage and our own briefing on wages, inflation and the economy.
The classic Neo-Liberal response on tax is to present it as a form of theft. This is then used as some sort of moral justification for tax dodging. There is a very good rebuttal briefing of this written by Richard Murphy. The essence of his argument is that tax and property rights go hand in hand. There is no alternative, unless you want to live in Somalia at the barrel of a gun. So if property rights are legitimate, so is tax.
It's only two sides of A4 and is well worth a read.
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