IT is harder to raise taxes on wealth and high earners in a devolved Scotland than it would be post-independence, Kate Forbes has said.
The Deputy First Minister hinted that the Scottish Government wanted to go further on tax changes, but said it was too easy in a devolved context for people to move south of the Border.
Answering a question from Oxfam Scotland chief Jamie Livingstone around wealth taxes at an SNP conference fringe event on tackling child poverty, Forbes said it was hard to “guarantee income”.
She went on: “What I mean by that is, the nature of a tax policy in a devolved context can't get away from the reality.
“It's very easy to move. It just is, very easy to move. So we have to take into account the behavioural impact also.
“Now I'm not saying that that is true of independent governments. It's not true of independent governments to the same extent.
“So when I used to have the finance secretary hat, my biggest headache was how to guarantee income was there for the full year. You set tax policy at the beginning of the year. If people move, then you don't get the money in.
“What you end up doing is you pay the UK government under the fiscal regime, you pay the UK Government money and it's all very unpleasant and we have less money overall.”
Forbes added: “Clearly, if you've got more powers, you can do other things.”
In recent years, the Scottish Government has committed to “progressive taxation”, with last year’s budget increase income tax on the highest earners and creating a new band for those earning between £75,000 and £125,140.
The Deputy First Minister further told the fringe event that tackling child poverty was a key issue which would have positive impacts across other areas of government.
She said that “the stats, the figures all point to this being one of the biggest policy interventions we can make to support the NHS, to support the justice system, to support the economy”.
Forbes further argued against “complicating it”, saying that too much money was being spent on bureaucracy and not enough was being actually delivered to people’s pockets.
The Deputy First Minister said: “The Scottish Child Payment recognised something quite novel and pioneering which is, don't create more bureaucracy, put money in people's pockets.
“If it costs £1 to give a kid 50p, there's something wrong there, because what we're doing with that scheme is just employing more public servants.
“What I would like to do is turn that round – to put £1.50 in the pocket of a child who needs it and empower them to make decisions. The Scottish Child Payment was aiming to be built on that.”
She argued that having benefits that are universal – as the Winter Fuel Payment was before Labour Chancellor Rachel Reeves cut it back – reduces stigma.
“[It] means you're not having to prove to your midwife why you are uniquely vulnerable and really deserve it by going into great detail about your personal circumstances”, she said, giving the example of a baby box.
“The same with school meals. People here, you knew what it was like to queue in the ‘other queue’ with everybody watching because you were poor.
“The universal nature of that, I think it actually reduces some of the trauma that some of these kids might feel.”
