Is it time to tax?

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Nicola Sturgeon suggested yesterday that the time has come when Scotland might need to raise its taxes to meet social need. It seems that the Scottish Labour, Liberal Democrat and Green parties do as well. Only the Scottish Tories don't.

I agree with Nicola Sturgeon: within the constraints of the current devolved powers given to Scotland then she has no choice but tax if she is, as required, to meet social need and balance the Scottish budget. But, as I argued in my Common Weal White Paper on Scottish Tax, this constraint exists because Scotland does not have its own central bank and does not have its own currency, both if which it could have if independent. Nor is it allowed to borrow. The reality is that without these key components that help define statehood there is no choice but balance the Scottish budget, even if to do so might not be what is actually required for Scotland to prosper.

In that case the option being presented by the SNP may not be optimal, but it is the only one that is possible. This needs to be understood. Tax and service provision need not be, and even should not be directly related one to the other in a well managed economy where the aim is full employment and low inflation as well as a comprehensive welfare state.  But when constraints, such as those Scotland suffers, are put on that process, outcomes will be sub-optimal. This needs to be said, loud and often.

It may be time to tax in Scotland, but only because there is no other choice.

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