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'Always trust the voters'

Brian Taylor | 12:16 UK time, Wednesday, 11 March 2009

Taxing matters once more, this time in re the Liberal Democrats.

They have, it would appear, shifted their focus from devolved to reserved taxation.

Let me explain.

You'll recall that the new leader, Tavish Scott, voiced support for using Holyrood's powers - aka the Tartan Tax - to cut the burden upon the Scottish people.

In September last year, he suggested that 2p might be lopped off the standard rate.

This, he argued, would liberate the people to spend and, hence, tackle the credit crunch.

But a glance at the agenda for this weekend's Scottish LibDem conference discloses that this proposal is absent from the discussions.

There is a lengthy - a very lengthy - policy motion on the economy which is to be advanced by the party's finance spokesman Jeremy Purvis.

tartan tax

The debate will be wound up by Alistair Carmichael MP.

In short, this is the real frontbench deal. Yet, in the 102 lines of the motion, nary a mention of the September Tartan Tax plan.

I pressed Mr Scott on this point and was advised that the 2p Scottish cut was "off the table" for now. It had failed, I was reminded, to win support during the budgetary process.

Which is true. Indeed, John Swinney declined even to talk to the Lib Dems while they pursued the Tartan Tax cut. So far, so fair.

However, read the motion for the Perth conference more closely. Lines 70 to 72 read as follows: "Conference further calls on the UK Government to: cut taxes for people on low and middle incomes, raising them for the richest so the tax cuts are affordable".

So the tax cuts are affordable? That means, in short and in explicit terms, that tax cuts for the lower-earners must be balanced by a hike in upper bands.

But think. Such an option is simply not available within the Scottish Parliament's present powers.

Balance of cuts

When Mr Scott urged a 2p cut in Scottish taxation in September, he was unable to suggest a counter-balancing increase for upper earners - because such a power does not exist.

It would seem to this observer therefore that there is a structural - and not just a political - objection to the September offer.

If we take the Perth motion as read, then the Lib Dems favour "affordable" taxation: a balance of cuts and increases.

By definition, the September offer did not feature that balance. It could not.

Mr Scott has an answer. To be fair, it is a substantive answer. This is to point out that his party favours radical reform to the tax system.

They want a significant transfer of tax powers to Holyrood.

Within that basket of new powers, they could argue credibly for tax reductions and, indeed, Mr Scott indicates that would indeed be his approach.

It is my understanding that, some years back, the Lib Dems tested the notion of a Tartan Tax cut with focus groups.

At that time, the voters didn't find the idea particularly attractive. They thought that, on its own, it lacked substance.

Always trust the voters, say I.

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