Deeper Cuts of the PBR

I'd thought that local SNP candidate Tam Smith would have learnt his lesson and stopped taking attributed quotes to other SNP spokespeople as his own. Sadly I see I've been proved wrong this time he is Michael Matheson MSP on the health committee.

However, the point that Tam raised about how the National Insurance hike will affect the NHS is valid one. As I blogged during and after last week's pre-budget report the pre-budget was full of regressive rather than progressive tax measures. Both the return of VAT to 17.5% and the increase of National insurance are leading to a high proportion of our poorer people paying a considerable amount in tax.

Obviously the rise in National Insurance will have an impact on all employers as their increase is payments is more than that which comes directly out of the employees pay. Those that are public employees obviously are taxing Peter to pay Paul. The SNP are saying that Darling National Insurance proposals equate to £44m out of the NHS Scotland budget. I'm not going to dispute that. Tam breaks that down to £5.99 million and £2.33 million in NHS Lothian and NHS Forth Valley respectively.

That is a considerable part out of the budget of services that Labour say they will be protecting as front line services in England. But of course in the devolved powers that is budgeting that is done by the devolved powers. There are less other departments from which they can draw on resources, because not all areas have a devolved equivalent.

Darling can put a freeze on the top earners in public services to help with that deficit, but elsewhere a cut in top salaries is the step beyond that. Indeed that is the point that Tavish Scott has been making in order to protect our key front line services.

Labour are clearly not thinking of all the implications of their taxing proposals. They are trying to avoid the headline tax issue of doing something with direct taxation, i.e. Income Tax because they are still trying to win the General Election but not hitting that too hard. But their stealth is starting to hit people hard. 32% of taxable income is now paid in income tax and national insurance by us all. If you were to spend all that you have left on VATable items you would actually pay 42% in tax (and that is only if you do not drive, drink or smoke). Labour are already taxing us heavily and doing it stealthily. As the SNP point out they are also taxing devolved powers in other ways as the sectors that are devolved have a high proportion of wages that have to come out of the budget.