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Sturgeon's stresses her plans for 'modest' tax rises for Scots

First Minister Nicola Sturgeon during First Minister's Questions at the Scottish Parliament in Edinburgh Photo: Press Association

On the day the Scottish government publishes its paper setting out the tax options for Holyrood what was the word of the day?

'Radical' perhaps? No. 'Transformational? No, not that one either, despite it being much overused by politicians. 'Sweeping'? Nope.

Hold on to your rhetorical hats, the word of the day from the lips of First Minister Nicola Sturgeon herself was 'modest'.

Ms Sturgeon was talking about the rises in income tax which appear inevitable in Scotland now it has new, more extensive powers.

And so important was this message that the First Minister used the word at least four times in her media conference to unveil the government document this morning.

At one point she even had to say herself that she was stressing the term. Why did Ms Sturgeon feel the need to do so?

Because for all the sometimes fiery left-of-centre rhetoric the SNP and its leader are actually pretty cautious when it comes to matters of taking more money from voters.

"No-one want to pay more tax," the First Minister told journalists as she set the tone for a 'mature conversation' on putting it up.

That, at least, is the perceived political wisdom which is why some Nationalists see the income tax powers given to Holyroodas a Unionist trap.

The idea that wicked Westminster gives the SNP an unpopular tax to raise - and not other mechanisms like business taxes - which then undermines the party and the independence cause is not one Ms Sturgeon subscribes to. Well, not quite.

When she was asked about that today she gave an answer which was a variation on the 'You might say that, I couldn't possibly comment' variety.

Yet those who think that income tax constrains politicians may have a point. In recent times most governments have shied away from putting up income tax and gone for less obvious revenue raising measures.

Increasing National Insurance, for example, as Gordon Brown did. A tax in all but name but NOT INCOME TAX.

So Ms Sturgeon and her party are proceeding cautiously (another word she used) in making the case for tax rises, pointing out that as a minority government they cannot to it alone.

Hence the analysis of the other parties' tax plans in this document called, snappily, 'The Role of Income Tax in Scotland's Budget'.

And while this slim volume is unlikely to become a bestseller, it is worth a read as it sets out very well the problems of raising money through income tax.

The first is that to get a substantial sum of money you have to tax a lot of taxpayers, and not just those at the very top, of whom there are far fewer the Scotland than the UK as a whole.

And second, that you have to factor in possible 'behavioural changes' when you put up taxes - people opting to take income through dividends (not taxed in Scotland) or moving south of the Border.

At her media conference I asked Ms Sturgeon about this. If tax is perceived to be too high north of the Border might people move, say, from Gretna to Carlisle?

Credit: Press Association

The First Minister told me that "would not make sense" as Scots benefit from things like 'free' university tuition, free personal care, and free prescriptions.

These are the benefits which the SNP has taken to calling the 'social contact' with the people of Scotland - you could put the words social democratic in front of that if you liked.

Now in order to maintain that social democrat social contract the SNP is going to ask Scottish taxpayers to pay, you guessed it, a 'modest' extra amount.

And they very much hope that in doing so they will have the support of all of the other left-of-centre parties at Holyrood - that's everyone other than the Tories.

Now, consensus can be a good thing, and Holyrood was supposed to encourage compromise but there could also be a political benefit for the SNP - if people don't like the tax hike, the blame is spread.

Negotiations between the finance minister Derek Mackay and the other parties are now set to start, ahead of the Scottish budget in December.

We don't yet know the fine detail but assuming a deal will be done - it's highly unlikely it won't be - but we can have an idea of who will be effected by the tax rise, or not.

It seems certain that anyone earning below around £24,000 - the median income in Scotland - will have to pay more tax and might even be a bit better off. Everyone agrees the lowest paid should not pay more.

The rest, about half of all Scottish taxpayers, will have to bear whatever burden (if you consider tax a burden, others see it as a boon) is imposed by Holyrood.

Which may well mean that the likes of primary school teachers, social workers, police officers, some nurses, will find more tax is taken out of their pay than their counterparts south of the Border.

It is hard to see how the SNP can claim this is in line with their 2016 manifesto pledge to freeze the basic rate of income tax "to protect those on low and middle (my emphasis) incomes".

What else can we say from today? Well, it appears likely that the new tax system will have more than the three tax bands we have now. Holyrood for the first time can alter rates and bands.

Ms Sturgeon made the point systems in other countries with more bands tend to be more progressive.

Most importantly we also learned how much revenue various combinations of taxes and bands will bring in. It ranges from £130 million to £430 million, assuming none of that behavioural change.

And that, most economists agree, would not be enough to fund, for example, an above inflation pay rise for public sector workers, despite the SNP making much of ending the current pay cap.

Other parties of the left, including Labour, the Lib Dems and the Greens say you could get more from the system. Labour leadership candidate Anas Sarwar say he could find £700 million.

But given the SNP is in the driving seat for this process, and the First Minister's caution over tax rises, it appears certain we are talking no more than a maximum of half a billion being raised.

Which is a tidy sum but with the demands of pay, the health service and much more, that cash will probably be spread rather thinly.

In terms of the overall Scottish budget of more than £30 billion, you might call that a modest increase.

For those who like this kind of thing, you can see the Scottish government's document and its estimates and assumptions here. Enjoy.

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