Today is the first working day of the new tax year. Usually, it is when tax rates change. But not today. Consider that. The new Labour government elected on a promise of change doesn’t see the need for change.
The balance of who pays what established under successive terms of Conservative governments is just about right. No need for the rich to pay more. No need for the poor to pay less. It’s pretty astonishing that any government would just abandon one of the key tools available to it to rebalance the fortunes of its citizens.
That this should be the case is a result of just how toxic the debate on tax has become. Years, decades of misinformation about how taxes are a burden on the individual and a drain on business have created the illusion that the taxes you pay go to someone else. That money is being taken out of your wage packet and given to others. For their benefit, not yours.
It’s nonsense of course. Taxes are how we fund the things together that most of us could never afford individually. They are in essence the membership fees we pay to join civilised society. They fund the schools, hospitals, roads and so much else which is available to everyone.
Taxes are also a mechanism to try to temper the grossly unequal distribution of wealth in capitalist economies. Or at least they ought to be. This can be achieved by linking the amount people pay to the assets they have. And this is where things have gone wrong.
The richest in the UK pay less tax today than they did under Thatcher. In order to protect this historical advantage, taxes on the rest of us have been kept high. The result is that most people perceive that the tax they pay is unfair, and many resent it. So, when the likes of Reform talk about cutting taxes, it resonates.
Paranoid of being seen to raise personal taxation Labour have tried to finesse balancing the books by raising National Insurance on employers. It goes up today. There are two things wrong with this and they belie Labour’s lack of progressive thinking on tax.
Firstly, not all businesses are equally affected. The biggest change is not the 1.5 percent rise in the rate of National Insurance, but its application to millions of part-time workers who have previously been exempt. And this has a hugely disproportionate effect on small businesses especially in the hospitality and retail sectors. So, whilst this change will have marginal effect on large corporations, just watch as your local restaurant goes under.
But the second problem is that this is a tax on business operations, not profits. I believe that businesses should contribute more to the public finances. But this should be based on ability to pay. Those who make the biggest profits should pay the most. A fairly organised economy needs a thriving small business sector where operators are able to make profits which can then be taxed. This policy will result in the opposite.
Those of us who believe we need to re-organise the economy so that it works for the people who live here need to now begin the long, slow journey to building a new narrative on tax.
Let’s start with a shout out for Tax Justice Scotland, an alliance of unions and campaigning groups formed at the end of last year and determined to change the terms of the debate. Go online and check them out.
Perhaps the biggest element in changing that debate is to shift it away from just looking at incomes. There is great income inequality of course. It’s increasing. And people who earn more should pay more. But in terms of inequality incomes are a poor second to the accumulation of wealth.
Take a look at Gary Stevenson’s videos on YouTube for a useful primer on how the financial system works to siphon resources away from the working and middle classes to the super-rich, and how in turn they use that wealth to perpetuate inequality.
If we are serious about those who can afford it paying more, it is time to work out new ways of taxing accumulated wealth. Little of this is held in cash. The bulk is assets like land, buildings, stocks and material goods.
We also need, and this is lacking in Tax Justice Scotland’s script at the moment, an understanding of what can be achieved by the limited powers of the devolved Scottish government and how they can be frustrated by Westminster.
Not being independent means you have no control over the movement of capital and labour within your borders. Without that people and companies can simply leave if asked to pay more.
The exception is land. The great estates simply cannot move if they are asked to fulfil a social obligation.
So, as we start thinking about manifestos for 2026, along with shifting the balance of power and demanding better economic levers in Scotland, we need to look again at maximising the ability we do have to ask the wealthiest to pay more.