FACT CHECK: Are Scots being 'clobbered' by higher tax rates?

“The Scottish Government spending a fortune on Tube ads trying to lure my constituents away – what the ads don’t mention is they would be clobbered by higher tax rates north of the border” – ex-Tory minister Greg Hands on Twitter 22 February 2020.

The Scottish Government spending a fortune on Tube ads trying to lure my constituents away - what the ads don’t mention is they would be clobbered by higher tax rates north of the border. pic.twitter.com/CRYw9AGHbb

— Greg Hands (@GregHands) February 22, 2020

DOORSTEP ANSWER

THE overall tax burden in Scotland is lower than for the UK as a whole thanks to lower income tax levels for 56% of payers, lower rate poundage for 95% of businesses, and lower average domestic rates (by 28%). Also, there are no university tuition fees, benefits are higher thanks to the new Scottish Child Payment Child, and there is free home for the elderly. Meanwhile, under the Tories, UK taxes are at their highest since WWII.

WHO IS GREG HANDS?

GREG Hands was born in New York and retains joint US-British citizenship. After Cambridge University he was a broker on the London and New York stock exchanges. Hands was first elected to Westminster in 2005. His election campaign was funded by Lord Ashcroft, a billionaire serial tax avoider with dual British and Belizean nationality. Lord Ashcroft has form. When he became a peer in 2000, he was forced by media pressure to promise to become a permanent UK citizen and pay taxes. But he continued to avoid tax on payments running into hundreds of millions of pounds from an offshore trust in Bermuda. When this was outed in 2010 (the year he helped fund Greg Hand’s election) Ashcroft again promised to pay full taxes in the UK. Except that the leaked Paradise Papers later showed he got round this by not taking any income from his offshore funds for several years. In March 2015, Ashcroft resigned from the House of Lords, allowing him to resume his non-dom, non-tax status.

READ MORE: Tory prompts Twitter fury with outrageous claim about Scotland

Greg Hands served as chief secretary to the Treasury for 12 months, between 2015 and 2016. As such, he helped prepare the July 2015 Budget, which raised £14bn in tax increases, only partly offset by £8bn in giveaways. In the 2016 Budget, £8bn tax and spending giveaways were offset by another £10bn of hidden tax increases and cuts. Overall, Hands’ year at the Treasury added to the UK tax burden. Possibly this explains his beef against the Scottish Government. It might simply be the case, as a tax raiser, that he can’t imagine the SNP doing the opposite.

Lord Ashcroft funded Greg Hands' election campaign

WHAT'S THE CURRENT TAX SITUATION IN SCOTLAND?

WHAT is the truth about how Scottish taxes compare with those levied in England? These figures are correct following the latest Scottish Budget, announced on 6 February 2020, but before the March UK Budget.

REALITY #1: INCOME TAX RATES FOR MOST PEOPLE ARE LOWER IN SCOTLAND THAN IN ENGLAND

SAYS who? Answer: John Macintosh, Tax Partner at Deloitte, the UK’s biggest tax consultancy. According to Macintosh, speaking after the Scottish Budget: "Lower earners continue to pay less tax than those in the rest of the UK; in 2019/20 the breakeven earnings were £26,993. The equivalent for 2020/21 is £27,243."

As a result, 56% of Scottish taxpayers pay less income tax than they would if they lived elsewhere in the UK. In the February Scottish Budget, thresholds for basic and intermediate rate payers were frozen while those for higher and top rate payers rose in line with inflation (ie stayed the same in real terms). This is hardly evidence of “clobbering” higher earners, to use Hands’ terminology. Note also that Scotland has more income tax bands than in England, ensuring that the tax regime is fairer while being more progressive.

REALITY #2: BUSINESS RATES ARE LOWER ON AVERAGE IN SCOTLAND

AS a result of the 2020 Scottish Budget, more than 95% of properties in Scotland will be subject to a lower rate poundage than they would face in other parts of the UK.

FACT REALITY #3: MOST PEOPLE IN SCOTLAND PAY LESS COUNCIL TAX THAN IN ENGLAND

COUNCIL tax in Scotland for the average Band D house is now some 14% lower in real terms than a decade ago, thanks to a nine-year freeze. By contrast, average Band D levels in England have risen in recent years at above inflation levels. In 2019/20, average Band D council tax in Scotland was a whopping 28% lower than in England.

REALITY #4: WELFARE BENEFITS ARE HIGHER IN SCOTLAND THAN IN ENGLAND

IN keeping with the Scottish Government’s aim to provide a "fair" Budget, support for those on low incomes is a priority. The new Scottish Child Payment will provide a weekly payment of £10, initially for low-income households with a child under six-years-old by Christmas 2020. Once it’s fully rolled out by 2022, this payment will help raise 30,000 children in Scotland out of poverty.

Kate Forbes has set out the new Scottish Budget

REALITY #5: THE SOCIAL WAGE IS HIGHER IN SCOTLAND

WITH no student tuition fees and free home care for the elderly, the social cost of living in Scotland is lower than in England, a fact Hands ignores. According to Moneywise Magazine, the leading UK independent financial advice journal: “When your children reach their teenage years, you would be better off in Scotland, where if you can put in three years of residency before the "qualifying date", they will receive free university education. Depending on your household income, they may also qualify for a bursary to help pay their living costs. Retirees may consider that in Scotland prescriptions are free … Later in retirement, if you are likely to need care, you may be better off in Scotland.”

THE STINGER: TAX BURDEN RISES UNDER TORIES

WHILE Tories like Hands like to perpetuate the myth of a high tax Scotland, the actual truth is that since the Conservatives took power in 2010, the overall tax burden in the UK (expressed as a share of National Income) has in fact risen. This includes the period when Hands was chief secretary to the Treasury (ie the minister responsible for preparing the Budget). According to the independent Institute for Fiscal Studies, total UK tax revenues will reach £760bn in 2019–20, or 34.5% of National Income – the highest sustained share since World War II.

Tory policies since 2010 have increased overall tax revenue by about £20bn – despite large giveaways increasing the income tax personal allowance, cutting the headline rate of corporation tax and freezing fuel duties. Tax-raising measures, including regressive rises in VAT and National Insurance contribution (NIC) rates, exceed these giveaways overall in revenue terms.

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As a result, low-income households in the UK have lost out overall, especially those with children. The poorest 10% of households have seen losses of 11% of their income (£1200 per year) on average; among those with children the figure rises to 20% (£4000). In Scotland, where social hosing costs are much lower, the impact on poor families is less pronounced.

What about the next Tory Budget, due in March? We know a planned cut to corporation tax cut has already been reversed, raising the share of taxes in National Income over the succeeding years.

FINALLY – TORY AD BLITZ IN SCOTLAND

IN fact, the only body “spending a fortune” on overt political advertising is the Tory Government which is spending more than £5m of taxpayer’s money on cinema and social media adverts north of the Border, to “love bomb” Scots into supporting the Union. That’s the equivalent of £1 for every person in Scotland.

FACT CHECK RATING 

Bordering on fake news...