Now here’s a funny thing

Think Scotland last post February 14 (!) 2022

Alasdair Galloway

The other day, unionist letter writer Alan Sutherland had a letter published in the Herald. A cynic might imagine that he has a regular column! But I digress.

Ed: Alan Sutherland is a member of the covert Scotland in Union letter-writing team exposed in this leaked email from July 2020 (top-left, second):

In his letter Sutherland comments that of the 10 countries cited in an SNP leaflet that they claim are “wealthier, happier and fairer” than Scotland, eight of them “collect an average of 41% of GDP in taxes, not 34% like the UK”. Indeed, Denmark’s rate is an eye-watering 46%.

In other words, the hypothesis is that those countries regularly cited as “wealthier, happier and fairer” than Scotland, have higher tax rates. As Sutherland goes on to argue, how would a “vote Yes for a a 20% tax rise” go in the next referendum. And put like that, he probably has a point. However, this is to consider the problem from the point of view of the UK. Would this still be so if we considered the issue from the point of view of the Danes?

Denmark, as Sutherland points out, collects an average of 46% of their GDP in tax. There are two points from this.

First, this isn’t just about income tax. It is about the amount of GDP that the government takes in tax from its economy, and there are very many ways of doing this other than income tax alone. The ordinary tax scheme in Denmark has a lower rate of 12.1% and a higher rate of 15%, though this only applies for incomes exceeding DKK 552,500.

However, the tax man isn’t done with you as the average Municipal tax rate is almost 25%, and the Labour Market tax is 8%. Share taxes go up from 27% for income of less than 57200 DKK or 42% above this. The top marginal tax rate for any individual cannot be more than 52.07%, though the labour market tax, share tax, property value tax, and church tax are not included in this. Therefore, the tax system in Scotland and Denmark are not really comparable.

So, the comparison is not really appropriate.

But more importantly – and it’s where Sutherland’s case not only falls apart, but actually contradicts itself. Put simply – and perhaps a little pejoratively – what he is saying is that in Scotland we just wouldn’t pay tax at those sorts of rates. In the present context, he might be right. But perhaps it would pay some dividends to ask why it is that Danes are happy to pay tax at those sorts of rates without getting out of the country, going to such as Norway, Sweden or even Germany?

Of course, this brings us hard up against fairer” and perhaps even “happier”, since “Danish people are consistently among the most satisfied with public services in OECD countries. In 2018, 88% and 84% of the population reported to be satisfied with the health and education systems, respectively. Since 2007 and for both services these values have improved, by four and 3 percentage points respectively” as OECD reported in 2019. (https://www.oecd.org/gov/gov-at-a-glance-2019-denmark.pdf)

To take a more objective measure, the Gini Coefficient of equality in Denmark is 27.7 (putting them at 30th in Europe), while the UK is at a much higher (higher is less good) at 35.1, and number 6.

Therefore, the implication of Sutherland’s data is not necessarily as he argues, but quite the reverse. Asking whether people in the UK would accept these tax rates tomorrow is a no brainer. Of course they wouldn’t. But posing this question this way screens off that people living in other countries – and successful ones – are happy to pay these tax rates for high quality public services (especially health and education, according to OECD).

In a piece back in October (Really Angry https://talkingupscotlandtwo.com/2022/10/28/really-angry/) I argued that a debate is needed to reconcile how much tax we pay with what we can expect from the state. Since Thatcher’s time we have increasingly paid less tax, but still expected high quality public services. The current explosion of the NHS is perhaps testament to that. Clearly, for practical purposes that can hardly continue, but for political or even ethical purposes it cannot go on.

However, also needed is a reframing of the debate from one that demonises any increase in income tax rates, to one that poses the question of when we are provided with first class public services (and they must be first class) how much are we prepared to pay.

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4 thoughts on “Now here’s a funny thing

  1. Absolutely.
    The question for Scots,not residents of the UK however,should be “Do you want quality public services and if so how do you wish to pay for them?”
    Given the disaster that Tory privatisation of most public services has been,I think the answer to the first part would be a resounding Yes.
    The second part might be more trickey.
    However,the unfolding disaster of essential energy supplies being in private hands,should be enough to convince most doubters.
    The really big question,however,is will a right wing English government welded to market forces allow Scotland to do this?

    Liked by 1 person

  2. Sutherland’s pitch of lower income tax and has long been a favoured pitch of the Tories alongside “efficiency” – These ploys only shift numbers under different headings but the realities are quite different.

    I well recall the dawn of Thatcher and the slow descent in my disposable income – Only when I escaped to Ireland from near destitution did I realise just how much of a con the UK had become, favouring only the Investor class to the detriment of Joe Public, PFI a prime example.

    Many years later and happily retired albeit periodically bored, I’m frankly amazed these scam artists survive let alone continue to parade this tired old tripe, even the “we can’t afford it” fairy has been dragged out as UK workers finally snap.

    If anything were needed to convey “we’d rather you were poorer” it will be this winter’s energy bills.

    Liked by 1 person

  3. I am always amazed when terms like ‘government money’ or the government are paying such and such to the NHS, no the people are paying, it’s not the government’s money. Given so many services are privatised, what does the English cabal do with the peoples’ money. When the ‘government’ announce a 5% price rise in rail travel, given it is not public owned, how come the government gets to decide on prices? Am I just being daft? The word extortionists comes to mind re the English government now.

    I felt sick yesterday watching a youtube video when an ad came on for their new build nuke fuel plant, (not sure where it is, south coast?) how wonderful, they claim to be saving the planet and future generations will thank them. Far as I have read new nuke plants cost a massive amount to build, a waste of money that should be being used for renewables.

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    1. I’ve said this before Hetty, but to repeat – HMG are not interested in the public good, only profit…
      It would take hundreds of Hinkley Point reactors to sate England’s shortfall in electrical energy, and look how well that ONE is going, as opposed to spending those billions insulating every home in the UK plus probably 10% of Europe.
      They are making money for their donors by kicking the ball into the long grass of solving the immediate problem for consumers.
      Hence the Johnson&Johnson playing with his johnson to witter on about mini reactor plants across the UK in record time despite not ONE having been built, Jam tomorrow plus a few decades with enormous on-costs and problems.
      I’ve never actually seen an Eton Mess as a dessert, but I’ve seen plenty as a desert.

      Liked by 1 person

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