Groups said reform is also needed to better tax wealth and carbon to fund national priorities
The Scottish Government can use Holyrood’s tax powers to help increase the resources available to support people on low incomes, invest in care and tackle the climate crisis, prominent campaign organisations and a leading progressive think tank have said.
Ahead of the Scottish Budget on 15 December, the Poverty Alliance, CPAG in Scotland, Oxfam Scotland, the Scottish Women’s Budget Group, One Parent Families Scotland, and IPPR Scotland, said ministers should require a greater contribution from the better off to help alleviate funding pressures.
Soaring inflation and rising costs – including from public sector pay claims linked to the spiralling cost of living crisis – are exerting significant pressure on Scotland’s public finances.
This pressure is likely to continue in the coming years, including as a result of a looming spending squeeze at UK level.
While Scottish ministers say their budget is “fixed” this financial year and have therefore made spending cuts and re-allocations to balance the books, this is not the case for 2023-24 when, the campaigners say, it must use devolved taxes to increase the resources available to it.
The organisations say this will help “minimise the damage” caused by inflation to the public services which those on low incomes and women rely on most, and create scope to increase support to those on the lowest incomes, including accelerating progress towards ending child poverty.
They say the Scottish Government should use existing devolved taxes to generate as much revenue as possible for the Scottish Budget next year and kick-start reform, including to reform or replace the Council Tax and to assess what new taxes on wealth and carbon it could introduce.
Peter Kelly, director, The Poverty Alliance, said: “For too long, our tax system simply hasn’t kept pace with Scotland’s growing inequality of wealth and income. People in poverty and low incomes in Scotland need urgent support.
“It’s time for the Scottish Government to use our tax powers in a progressive way, to raise the investment we need for the just and compassionate society that people believe in.
“Failing to meet that challenge will result in more cuts to the services that we all need, but that are an essential lifeline for those who need it most. We simply can’t allow that to happen.”
With Scotland’s richest households having 217 times more wealth than the poorest, the organisations say that tax is a critical tool to build a just, compassionate and sustainable economy within a fairer society, and that a smaller gap between rich and poor will mean a happier, healthier, and more successful population.
They say that the Scottish Government should listen to Scotland’s people, with nearly two-thirds saying they want increased taxation and spending on health, education and social security.
Some 68% say that income should be redistributed from the better-off to those who are less well-off.
Satwat Rehman, chief executive of One Parent Families Scotland, said: “It is vital that the Scottish Government raises taxes on the wealthy to support an increased investment in affordable housing, childcare and enhanced social security to eradicate poverty.
“Preventing and ending child poverty is not only essential for the life chances of the one in four children in Scotland living in poverty but is also the foundation stone of a healthier society and a stronger economy.”
The call comes after Scotland’s Children’s Commissioner said that what he is “seeing and hearing” from children is “really terrifying” amid deepening poverty, and with surveys of unpaid carers and single parents showing the cost of living crisis is making the challenging financial pressures faced by many even worse.
The UK Committee on Climate Change says Scotland’s progress in cutting emissions has “largely stalled” with the legal targets “in danger of becoming meaningless”.
All levers, including tax, should be used to make polluters pay to accelerate climate action and to drive behaviour change, with evidence showing that, on average, those with higher-incomes and wealth have disproportionately higher emissions.
Important tax levers, such as investment income tax, Capital Gains Tax, Corporation Tax and Inheritance Tax, are reserved to Westminster, but the Scottish Parliament has a range of tax powers the Scottish Government could use.
These include partial control over Income Tax and full control over local tax and would raise additional money, ensuring those with the highest incomes pay more and protecting those on the lowest.
Jamie Livingstone, head of Oxfam Scotland, said: “This Budget must be a turning point on tax. Too many governments shy away from taxing high incomes and wealth, while making polluters pay, to reduce inequality and ensure a fair contribution by those who can most afford it: the Scottish Government cannot be one of them.
“It should make the common-sense choice to use existing devolved taxes to minimise the damage to next year’s Scottish Budget so it can boost help to those in poverty. But deeper tax reform is long overdue - and can no longer be delayed.
“The Scottish Government must kick-start the urgent reforms we need to tax wealth and carbon so that we can tackle inequality, invest in care and deliver climate justice.”
John Dickie, director of Child Poverty Action Group (CPAG) in Scotland, added: “Let there be no doubt, Scotland has the income and wealth to end the scandal of child poverty in our rich country.
“The Finance Secretary must now do the right thing and go further in using our tax, as well as our spending powers, to harness that income and that wealth, so that every family has the resources they need to give their children a decent start in life.
“In the current challenging climate that means increasing existing Scottish taxes progressively to boost the revenues available to deliver on child poverty plans, as well as urgently assessing what new taxes could be introduced with the powers Holyrood has.”
A Scottish Government spokesperson told the Herald: “The Scottish Government has already delivered the fairest and most progressive tax system in the UK while raising extra revenue to invest in public services and Scotland’s economy.
“Proposals on tax policy for 2023-24 will be published as part of the Scottish Budget on December 15.”