The Conservative Government and the SNP Government are set to engage in a tax war that will cut the money for education and mental health. That is the warning from the leader of the Scottish Liberal Democrats Willie Rennie in speech to Reform Scotland in Edinburgh on Tuesday. The speech is part of their series of focused on the Scottish Budget.
Willie Rennie will say that the battle between SNP and Conservative ministers to undercut each other started with corporation tax and moved on to air passenger duty. Now Brexit will bring a whole new level of threat to public services from this tax war.
Willie Rennie will say:
“My fear is that we are in the early skirmishes of a tax war between the SNP and Conservative Governments. Their actions will lead to cuts to education and mental health which will stop dead the opportunities to grow a strong Scottish economy.
“In the independence referendum Alex Salmond promised to cut Corporation Tax down to the levels in Ireland. His first step was to go 3% below whatever George Osborne had set for the UK. That was only the start. You can just imagine. Scotland cuts, so UK cuts back in order to stymie the advantage. Then Scotland cuts again to get below again. All the while public services get cut in Scotland and the UK to pay for it.
“This hasn’t gone away. Nicola Sturgeon still believes in cuts to Corporation Tax. It would be a race to the bottom if Corporation Tax was ever in the SNP’s hands.
“Now the SNP want to do the same on Air Passenger Duty. Relying on supposed neutral evidence from the aviation industry cuts are justified as a means to promote flights to and from Scotland. We know that the Conservative Government would respond in kind to protect their air sector, particularly in the north of England. They will cut Air Passenger Duty too. And the SNP would cut again to maintain some kind of advantage. The environment loses and public services lose the revenue.
“Post Brexit things get really serious for public services under the Conservatives. Chancellor Philip Hammond has spoken of the idea a low-tax, low-waged economy as an alternative to membership of the European Union. It is his Singapore option. That surely would lead to yet another battle over tax rates with Scotland and perhaps even other countries in Europe. A Europe wide race to the bottom, to lower tax, to cut public services, to cut tax once more. All in the desperate hope that economic growth will come.
“It’s a tax war that will only lead to a dramatic shrinking of the state. Important areas like education and mental health will be hit hard.
“That is the economic folly of a low tax war. It will choke our economy by depriving it of the investment in people that gives a healthy, well trained workforce.
“The Liberal Democrat way is to invest in the talents and well-being of people so they can contribute to a growing and vibrant economy. We aim for a high-wage, high-skill economy, co-operating with other countries, to lead to more wealth and more investment to once more grow the economy.”