<\/p>\n
Malcolm Offord with party manifesto (pic: Terry Murden \/ DB Media Services)<\/p>\n
Reform\u2019s plans to cut income tax in Scotland have been described by a key research body as \u201cnot credible\u201d.<\/p>\n
The Institute for Fiscal Studies said Reform\u2019s flagship policy to trim income tax rates at 1% below the rest of the UK, saving \u00a32 billion a year by 2030, come at a time when the Scottish budget is already under strain. <\/p>\n
Reform\u2019s tax plans were announced in January and repeated at this week\u2019s manifesto launch, with Mr party leader Malcolm Offord claiming the saving would come from economic growth and cutting the cost of 132 quangos.<\/p>\n
David\u00a0Phillips, head of devolved and local government finance at the IFS, noted that the Scottish fiscal framework means that cuts to capital investment \u2013 which includes much of the spending on \u2018net zero\u2019 initiatives \u2013 cannot be used to pay for tax cuts.<\/p>\n
\u201cReform UK also claims that the income tax cuts would in fact pay for themselves via higher economic growth.\u00a0This is not credible.\u00a0<\/p>\n
\u201cSpecifically, the manifesto\u2019s claim that each percentage point of additional economic growth would generate a cumulative \u00a38 billion over 10 years and that this would \u2018repay the \u00a32 billion up-front cost four times over\u2019 is wrong.<\/p>\n
\u201cThere is room for reasonable disagreement as to the likely size of behavioural responses [to tax cuts] but there is no evidence to suggest that the tax cuts would pay for themselves.<\/p>\n
\u201cMoreover, because only around one third of tax revenues are devolved to Scotland, only part of the revenue increase that would result from increased economic growth would accrue to the Scottish Government.<\/p>\n
\u201cBecause of this, the Scottish Fiscal Commission estimates that a 1% boost to earnings, for example, would boost devolved income tax revenues by only around \u00a3300 million a year (or around \u00a33 billion over 10 years).\u201d<\/p>\n
Mr Phillips adds that the \u00a32 billion (or more) cost of the income tax cuts is not a one-off up-front cost \u2013 it is an annual cost. <\/p>\n
\u201cEven if the figure were correct, \u00a38 billion over 10 years does not exceed \u00a32 billion per year, let alone repay it four times over.<\/p>\n
\u201cThe \u2018self-funding\u2019 tax cuts are therefore a mirage created by a misunderstanding or misrepresentation of the current devolution settlement and incorrectly comparing cumulative and annual figures. This is not good enough.<\/p>\n
\u201cThe combination of big tax cuts and implied benefit increases\u00a0without any identified source of funding\u00a0is not fiscally credible. And the analysis of the potential revenue effects of the headline income tax cuts is unserious at best.\u201d<\/p>\n
Scottish Liberal Democrat economy spokesperson Jamie Greene said: \u201cComing after a clown show of a launch event and the deselection of a candidate 24 hours after they were announced, this is further confirmation that Reform UK are not a party to be taken seriously.\u201d<\/p>\n
\t #Reforms #income #tax #cuts #credible #IFS #Daily #Business<\/p>\n","protected":false},"excerpt":{"rendered":"
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