Peter MacMahon's Politics Blog: Scottish Labour throws down tax guantlet to the SNP

Kezia Dugdale Photo: PA

Well that's thrown the Labour cat among the Nationalist pigeons then. Or at least Labour hopes so.

Kezia Dugdale, the party's still new leader, has proposed using the current tax powers Holyrood has to put up income tax by a penny.

To most observers it's what civil servants advising their political masters about a controversial policy describe as "bold, minister, bold..."

The accepted wisdom is that parties which propose a tax rise - more specifically an income tax rise - are committing political hara-kiri.

Those with long memories will recall then shadow Chancellor John Smith's Labour's shadow budget in 1992 which proposed an increase in the top rate of tax from 40% to 50%.

It was dubbed "Labour's tax bombshell" by the Tories and is said to have contributed to John Major's election victory over Neil Kinnock.

Prime Minister John Major gets to grips with the leader of the opposition Labour leader Neil Kinnock, in a 1992 episode of 'Spitting Image' Credit: PA

And then there was the SNP's 'penny for Scotland' plans in 1999 when the Nationalists proposed to raise money using the then Holyrood tax powers.

Both of these parties tax promises have been judged to have contributed to their defeats - for Labour and the SNP respectively.

Under Tony Blair and Gordon Brown Labour pulled back from promising tax cuts because they had been scarred for life by 1992.

Similarly, John Swinney, now the finance minister at Holyrood, was part of the SNP's 'penny for Scotland' campaign and learned lessons from that experience.

This is how Ms Dugdale explain her move: "Given the choice between using our powers or making cuts to our children's future, we choose to use our powers."

She had this to say to First Minister Nicola Sturgeon: "I have listened to you for twenty years tell Scotland that more powers mean fewer cuts. We have the power in Scotland now, so let's work together to avoid these cuts."

So why has she dispensed with political received wisdom and proposed a rise which Labour claims will raise half a billion pounds a year to spend on education?

As ever with politicians there are a mix of reasons.

One is that Labour believe that with council budgets being cut by the SNP government - something ministers admit - voters will tolerate a tax rise if the money is spent on an important public service.

The second is the raw politics. Labour want to challenge what they see is the SNP's 'talk Left, but act Right' stance.

Nationalist MSPs, from the First Minister down, are forever proclaiming their progressive credentials.

Labour hope that Sturgeon's MSPs will feel distinctly awkward opposing tax rises and being, in Labour's view, on the same side as the Tories.

Now is the time for the SNP to "put their money where their mouth is", as Labour's education spokesperson Iain Gray has put it.

SNP must Credit: PA

It might also be suggested there may also be a third reason - with Labour languishing in the polls do they have anything to lose?

A crucial question is whether the tax plan actually is progressive, in other words does it redistribute tax from the better off to the less well off?

Respected academics like Professor David Bell and David Eiser of Stirling University say the answer to that is 'yes', it is "slightly progressive".

I've blogged on this before here.

How then is the SNP reacting? When the Liberal Democrats proposed a very similar policy last week SNP MSPs said the plans would hit "the poorest".

Being charitable, that was a loose use of language as by definition "the poorest" don't pay any tax if they earn below the £11,000 tax free allowance for the next financial year.

The SNP has slightly changed its attack, arguing today that Labour's plan to top up the lowest income earners with an extra £100 payment as costly and bureaucratic.

A Scottish Government source told the Press Association: "Around 2.2 million basic rate taxpayers across Scotland - including almost half a million pensioners - would be hit by Labour's tax grab.

"The lowest paid would actually lose out, because anyone earning less than £11,000 - mostly women in part-time work - can still pay National Insurance but would not benefit from the proposed £100 rebate."

The Lib Dems welcome the plan, and claim it was all their idea and they got there first.

Meanwhile the Scottish Tories stick to their line that people in Scotland should not pay any more than those south of the Border and say they even hope to cut taxes.

So has the Labour moved ruffled those feathers? So far, SNP MSPs are trying their best to look unruffled, but they have been forced to defend their current tax plans not to raise tax.

That, Labour will claim is a start for them.

The SNP on the other had will look back and Labour in 1992 and their own party in 1999 and draw a different conclusion.

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