What do you think when you think about teachers? Two things, if you are anything like me: low pay and time off work with stress. It’s a hard job, no doubt. Teaching unions jealously guard their grievances and if you say that teachers are actually quite well paid and that teaching is a rewarding career you’ll be hounded by legions of miserabilists on social media. So better not tell them that from next year many teachers are to be classed as high earners thanks to the Scottish government’s latest stealth tax raid.
Basic grade teachers earning over £43,662 next year will find themselves paying a marginal tax rate of 42p. I’m told that many teachers will still have student debt to pay off too at a rate of 9 per cent. That means a marginal tax rate of 51 per cent, which is hardly believable. And don’t even start about promoted teachers on the Chartered Teacher pay scale which begins at £50,000. They’ll be paying around £1,500 extra for the privilege of residing in Scotland.
That teachers are paying higher tax in part to finance their recent increased pay deal may be little consolation. It was ever thus: government gives with one hand and takes away with the other. But never has a tax rise been quite so mendaciously misrepresented.
Only those with the ‘broadest shoulders’ will pay the highest rate of tax, intoned the Scottish finance secretary, Shona Robison, failing to make clear that broad shoulders have become significantly narrower in recent years and are possessed increasingly by public sector workers who don’t believe they are remotely wealthy. The number of Scots paying the higher rates of tax has almost doubled from around 367,000 in 2019-20 to 648,000 next year. Indeed a tax rate that was only supposed to be levied on the truly well off is in danger of becoming the new standard rate. Well, if you want to emulate Scandinavian fiscal policy, this is probably the way to go. But the government could do with being a bit more honest about it.
Robison presumably hoped that the howls of anger from those paying the new 45p rate over £75,000 would drown out any complaints lower down the pay scale. She was mostly right. Her disingenuous assurance that only very senior public sector workers – head teachers, doctors etc – would be paying more tax was accepted at face value. Indeed, some journalists complained that the Scottish government had betrayed its redistributive principles by not increasing taxes on anyone earning less than £75,000. In fact, Ms Robison has redistributed another £300 million or so – but from people who don’t think they are wealthy and probably don’t realise it is even happening.
Now, tax is hard; tax is boring. No one really wants to talk about it, still less calculate their own. Journalists, myself included, loathe writing pieces about fiscal drag, block grants and marginal rates. Numbers are a turn off and no one believes them anyway. It’s much easier to quote the Joseph Rowntree Foundation claiming the Scottish government has betrayed the poor by failing to increase the Scottish child payment to £30 as promised by Humza Yousaf during his election campaign. Or the Scottish Trades Union Congress’s call to ‘tax the rich’ to bring in a £3 billion extra by wealth taxes and other fanciful devices.
But why has Shona Robison not made council tax more progressive instead of freezing it to benefit the better off? Ms Robison refused to talk about the number of jobs that will have to go in her reshaping of local services. We know from the Scottish government’s own 2022 spending review that more than 30,000 jobs need to disappear in the next few years. Probably more now that welfare spending has increased. Even without an increase the cost of the Scottish child payment has risen from £59 million in 2019 to £450 million.
So why doesn’t the Scottish government just tax the rich properly, say the various poverty campaigners interviewed by the BBC? Well for one important reason: there just aren’t enough of them. We keep reading claims about the wealth of Scottish billionaires but there are only a handful of them in Scotland and many don’t actually live here. There are only 40,000 Scots earning the top rate of tax and they are often in the public sector like hospital consultants. As Labour’s finance spokesman, Michael Marra MSP, pointed out, Scotland has already has problem attracting oncologists because they don’t want to pay higher taxes on lower salaries than they would get in England or abroad. Labour are now the ‘no more taxes’ party. That is as sure a measure of how the climate has changed. Marra says, echoing Churchill, that you can’t tax yourself to prosperity.
A salary of £75,000 is only considered plutocratic in Scotland because there are so few people earning above that. Shona Robison’s tax increases on that cohort and on people paying the old ‘additional rate’ above £125,000, will yield a grand total of around £80 million, according to the Scottish Fiscal Commission. That was never going to fill that £1.5 billion black hole everyone talks about in the Scottish accounts. This is the reality of tax and spend. If you want better public services then it has to be paid for. Increasingly, in a low growth, low earning country like Scotland that means taxing earners far down the pay scale or growing the numbers who earn high salaries. The top fifth of earners in Scotland already contribute 60 per cent of revenues.
The Scottish budget is overdrawn because of three things: increased welfare payments, pay deals to public sector workers and inflation. Of course this is all Westminster’s fault, insists the SNP, for not increasing the Barnett subsidy – the £41 billion block grant. This is entirely bogus. Without financial transfers from Westminster, the Scottish government would have to find more just to fund the threadbare services we have.
Most of us thought 20 years ago that the ‘Barnett Squeeze’ would have eroded Scotland’s spending advantage by now but for complex reasons it remains. In Scotland , pre-pandemic, spending was still £7,612 per person in Scotland, around 27 per cent higher than the £5,971 per person in England, according to the Institute for Fiscal Studies. Scottish public services should be the best in the UK. They aren’t. In 2023, over half a million Scots were waiting for treatment.
But there I go again: writing strings of numbers that no one believes. If you quote the IFS you will be piled on by SNP supporters insisting that this is a lie. Indeed, they think it is the other way round: that Scotland subsidies England. Well a lot of the most ardent Scottish nationalists are teachers. Wait till they see their P60 next year.
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