The new tax powers that have come to Scotland mean that for the first time, voters at this Holyrood election will go to the ballot box with a clear idea of how parties will pay for the policies they have campaigned on.
Liberal Democrats have been clear that we want to see the new tax powers that Scotland has used to secure a massive investment in the future. Our penny for education policy – with a penny added to income tax bands - will raise £475m for nurseries, schools and colleges. Increases in the personal allowance mean that we can do this without affecting people at the bottom. No-one earning less than £19,000 would pay a penny more tax next year under our plan.
We would do this in 2016 because the situation in education is urgent. But more tax powers will come on stream in 2017 too. They would give us greater flexibility to do things differently in Scotland.
It is important that all parties set out how they would use these powers too. Yesterday at the David Hume Institute I set out our key priority for the 2017 powers.
Unlike the Tories, who plan a tax cut for top earners, we think people on low and middle incomes should come first. This is why I have called for the introduction of a new Scottish Zero-Rate that would start where the personal tax free allowance stops. This would increase the amount of money people earn before they start paying any income tax at all on their wages.
The Scottish Zero-Rate will take more low paid people out of income tax completely and cut the taxes of people on low and middle incomes. It is a power that we specifically and purposefully argued should be in the Smith Commission proposals and is sitting there in section 13(5) of the Scotland Bill.
This approach will sound familiar to anyone who saw our record in government. During the last UK Parliament, we forced the Conservatives to increase the income tax threshold by more than £4000, giving more than 2 million Scots an £800 tax cut over the 2015-15 Parliament. The new powers that will come to the Scottish Parliament in 2017 will let us build on that progress with a Zero-Rate band.
The Liberal Democrats have set the agenda on tax, with a radical plan for a penny for education and a clear commitment to cutting tax for low and middle earners once we start seeing the economic and financial benefit of that investment in education.
Our plans are progressive and show how we can invest in services while protecting people on low and middle incomes.