A trickle of tax powers will fertilize nothing

Ken Macintosh

The tussle for the future of Labour’s devolution policy has begun, and in the Herald on Monday Ken Macintosh stuck a dagger into the wooly cloak of the Lamont Commission. He said “we would be cutting off our nose to spite our face by fully devolving income tax. It would not be fair to a devolved Scotland. It would be less redistributive and less progressive too.” And what is the nub of his argument? That it benefits Scotland to receive a share of tax paid by Britain’s rich in London, and that by devolving income tax we will be losing this benefit just so we can suit our penchant for the principle of subsidiarity.

Ken Macintosh’s central argument appears to be that we are better off because London, with 18% of the UK’s higher-rate taxpayers compared to Scotland’s mere 8%, is within the same income tax jurisdiction as our own, and we all benefit from being attached to this concentration of wealth and power. This is part of the No campaign’s ‘pooling and sharing’ argument for Westminster to reserve tax and spending powers. As Gordon Brown put it: “this is a big idea, that we pool and share resources in such a way that we can give benefits, particularly to those people who are most in need.” But it raises questions as to what Macintosh and some of his Labour colleagues really aspire to in terms of the division of wealth. And what does Ken Macintosh mean when he says Scotland would be “less redistributive and less progressive” if it had income tax powers?

One kind of redistribution skims some wealth from the rich to fund services for all, and is basically the state’s way of ensuring there is some trickle down effect that follows from the rich accumulating more income. This is what the heralded 50% income tax rate amounts to: just a bit more tax on rich people who are still getting richer, and who hold onto most of the profit they make from the work people do. Macintosh’s conception of redistribution would leave the rich still wealthy and powerful after they pay their tax. His politics reveal the aristocratism of New Labour – of Ken Macintosh and Jim Murphy, not to mention Peter Mandelson who was so “intensely relaxed” by the super-rich that he worked to influence his party into abandoning its historic support for redistribution of power and wealth.

In aristocracies the patronage of the rich maintains public life. When the people become dependent on the rich, they tend to learn to appreciate them, and even to admire them. This is one of New Labour’s legacies, and parts of London’s Labour elite still call it progressive. Their brand of progress, promulgated by the eponymous think-tank funded by the capitalist Sainsbury, seems to amount to taking just enough taxation to give politics a semblance of social justice and prevent a regression into extreme exploitation. It does not tax enough to put any constraint on capitalist’s exploitative activity. It is a disguise for state-led trickle-down economics, and Laffer curve economics, of the kind criticized by Red Labour and figures in the Campaign for Socialism who will be taking the fight to Labour for full devolution at their conference this weekend.

So Macintosh is not progressive to say we should remain in a tax jurisdiction with a growing share of some of the richest people in the world, under a government that sets tax rates no higher than what the rich themselves are content with. Progressive taxation should help us advance towards a society where there are fewer rich people, a small and shrinking gap between rich and poor, and a system that tends towards equality, rather than celebrating the rich. Sadly it is an argument without resonance in the Westminster Labour group.

There is another kind of redistribution that is a permanent transfer of wealth and power from the rich to the poor, from those who have more to those who have less, from the upper classes to lower classes. Westminster has failed to address the unequal distribution of power and wealth between classes, and after a Yes vote the challenge will be for Labour in Scotland to use the powers of independence – including, yes, income tax – for this end. Social redistribution is the condition for the independence of those who lack power and wealth at present – and Scottish Labour should use the powers of sovereignty to secure the independence of ordinary people.

But here is where an old Labour vision and Macintosh’s diverge on a third point. His instinct is to preserve, ours is to reform and devolve real power. He said “I see the constitutional arrangements existing in equilibrium”. But what’s being held up in his balancing act? The rich and powerful. And what takes the burden of its support? The poor, exploited, badly paid and badly treated, both here and abroad; poverty and inequality in a system that’s too broken ever to rebalance, that works only for the very rich towards whom Macintosh seems so grateful for their meager contribution. They call their dominance ‘equilibrium’.

Macintosh says: “Going too far in devolving tax or benefits risks fragmenting the system”. Sounds good to me. We want a changed system, and our fragment (which we call Scotland) can work better than the machine whose cogs spin fastest in London, but have slowed almost to a halt in regions and communities from which the wealth once flowed. If we stick with joint decision-making on income tax across the UK, we will end up stuck with regressive politics that work to support the rich and sustain inequality and poverty. Income tax is part of a whole system of levers which we need to shift from regress to progress.

The British future means ever-more dominance by London that works for hardly anyone. An independent Scotland is a route to a different end – so that we can use powers for the purposes our forebears set out, to build a system set on social justice. And it is also the start of a fragmentation of Britain, so that wealth does not stream down from London, but emerges from and fertilizes the countries and regions of these islands. If this is what Macintosh calls “cutting of our nose to spite our face”, then a facelift for Britain is long overdue.

Cailean Gallagher

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