How rhetoric has shaped Scotland’s income tax debate

Is Scotland the “fairest” or “highest” taxed part of the UK? 

These are the rhetorical questions that have dominated Scotland’s income tax debate ever since the Scottish Parliament started setting income tax differently from the rest of the United Kingdom. 

How did this rhetoric develop? What has been the response? And in a rapidly changing political and economic environment, will these demarcation lines hold into a second decade? 

In the beginning 

The Scottish Parliament, or Holyrood, has had the power to set income tax differently from the rest of the UK since 1999, but it was not until 2017 that it chose to do so. 

What began as a single decision to freeze the level that people pay the higher rate of tax evolved over time into a regime that today includes entirely new (and higher) rates of tax. It has created a system that has been described as being slightly more generous for those earning less than around £28,000 a year, and increasingly less so for everyone else. 

Rhetoric’s emergence 

Aristotle wrote that successful persuasive arguments demonstrate ethos, logos and pathos, namely, the character of those making the argument, the arguments themselves and their emotional appeal. These three proofs of persuasion are evident in Scotland’s income tax debate. 

The “fairest” taxed part of the UK 

The character (ethos) of those pointing to Scotland as the “fairest” taxed part of the UK is well understood even to those with a passing interest in the politics of contemporary Scotland. 

Its chief instigator is the governing Scottish National Party (SNP), who have benefitted from nearly two decades of electoral popularity. Their first Holyrood election victory in 2007, an unexpected landslide in 2011 and an explosion in popular support following the 2014 independence referendum has given the party almost complete domination of the Scottish political scene and the ability to set the policy agenda.   

A link emerged between the party’s electoral popularity and confidence in it to stand up for Scottish interests in government. In 2019, 61% of respondents to the Scottish Social Attitudes Survey (SSA) said they trusted Scottish Government to act in the country’s best interests, the highest number recorded since 1999. Independence, while undelivered, sustained the party’s fortunes for the next decade. 

The logic of divergence has been to argue it necessary to shield Scotland from UK-driven policies like austerity and Brexit, to protect the lowest paid and to increase investment in public services. 

The emotional appeal, or pathos, is controversial. It draws on the contested notion of ‘Scottish exceptionalism’, the idea that Scotland and England are culturally different from each other. It has been prominent since the SNP came to power and is regularly used to distinguish Scottish actions from those in the rest of the UK. 

When the current First Minister John Swinney (then Finance Secretary) spoke of his government’s “distinctive decisions” in the face of “calamitous (UK) choices”, he demonstrated the argument made by the Chartered PR Practitioner Alastair Stewart, who wrote: “The SNP always make the case that Scotland’s values are wholly at odds with Westminster’s inhumanity”. 

The clearest demonstration of this theory in practice is Scotland’s so-called “social contract”, a catch-all term used to describe the basket of public services that are free in Scotland but not elsewhere in the UK including free eye tests, prescriptions, university tuition and bus travel for the young and old. 

Scotland as the “highest” taxed part of the UK 

There are two main groups to consider when considering the ethos of those involved in the discussion around Scotland as being the “highest” taxed part of the country. 

The first are those acting in self-interest. There is the predictable political rhetoric of opposition parties, of which the Scottish Conservatives’ decision to dub former First Minister Humza Yousaf “high tax Humza” is an example. Their motivation, like other opposition parties, is borne of political opportunism and the goal of winning votes. 

Then there are the myriad business and trade groups, of which the Scottish Chambers of Commerce, (who described the recent budget as “bleak”) and the Institute of Directors (“a barrier to attracting and retaining talent”), are but two in a crowded commentariat. 

There is crossover in the logic (logos) and emotional appeal (pathos) used by both. Each would like to see Scottish tax rates equalised with the UK’s and they argue that higher taxes make Scotland a less attractive place for people to live, work and do business. In the very worst-case scenarios, they warn people will leave the country if taxes get too high. 

The second group are those who offer informed and objective comment and advice. Their ethos is less about self-interest and directly taking sides in the rhetorical debate but is instead to bring expertise to the debate. 

They include groups like the Scottish Fiscal Commission (SFC), Scotland’s equivalent of the Office for Budget Responsibility, economic think-tanks like the Institute for Fiscal Studies, and tax experts like the Chartered Institute of Taxation. 

Their logos is to help policymakers understand the consequences of their decisions and to influence better policy making. That might mean forecasting how much money will be raised or lost from having higher tax rates and explaining how taxpayers can change their behaviours to avoid higher taxes, like paying more money into a pension or working less. These arguments can be more dispassionate and therefore lack a direct emotional appeal (pathos), but their analysis can (and is) used by actors on both sides of the tax debate to justify their decisions and as a result, they indirectly impact decision-making. 

The reactions to tax divergence 

Ethos, logos and pathos help us understand how rhetoric has developed. Persuasion helps us consider its impact. 

Richard Perloff described persuasion as a process of free choice, where communicators try to influence how others think and feel. The reaction of those who are being influenced can be understood through the Elaboration Likelihood Model (ELM), which argues people will either invest time and effort to understand the direct message (centrally), or they will engage indirectly (peripherally) by taking cues from wider stimuli. Both have resonance in the Scottish tax debate. 

Those engaging centrally include the business groups who regularly commission and cite research to support their message that divergence is an economic deterrent. They include the trade body Scottish Financial Enterprise, who earlier this year commissioned research suggesting that 8 in 10 of their member firms are struggling to hire and keep staff because of higher taxes. The media has expanded on these concerns, reporting that would-be job seekers are demanding a ‘Scotland weighting’, a bounty to cover the costs of higher taxes. On the opposite side of the discussion are groups like Oxfam, who have described behavioural changes as “conjecture” and argued that the Scottish Parliament could be making even more use of its tax-raising powers. 

According to HMRC, net migration into Scotland has actually increased since divergence. This suggests that the policy has not been the deterrent some have claimed, but the fact there is some evidence of the very rich changing their habits gives comfort to both sides of the argument. 

The SFC has suggested that taxpayers within Scotland are already adjusting their behaviour. They believe that as much as half the money that could be raised through Scotland’s new ‘advanced’ rate of tax and 85% of the money from increasing the highest rate of tax by 1p will be lost through actions like working less or paying more into a pension. The cost to the government in lost revenue is maybe why Graeme Roy, who heads the SFC, once described the benefit to low paid taxpayers from the Scottish tax system (currently around 44p a week) as “an expensive soundbite”. 

However, it is the ‘peripheral’ response to the tax debate, and particularly the reaction of taxpayers themselves, where the most interesting reactions are taking place. Rather than tax itself, wider economic concerns and confidence in government are driving a shift in perceptions. 

A summer survey for the David Hume Institute identified tax as a top three economic concern of around a fifth of voters. But these worries were far outstripped by fears over the cost-of-living and satisfaction with public services. These findings are not isolated. That same SSA survey that five years ago found near record-high levels of trust in the government now records the lowest level of support in the post-devolution era. Meanwhile, the argument that higher taxes mean better public services is being called into question, as public spending is being cut by up to £500 million and the government’s own figures underscore the value of the extra funding Scotland receives by being part of the UK. 

The ‘social contract’, for so long a third rail in Scottish politics, is no longer immune from criticism. With limits on the number of Scottish students universities admit and hospitals urging patients to only use the medicines they need, influential media voices have started to call for a “grown up discussion” on Scotland’s “freebie culture”. For its part, there are signs these worries may force the government to change its tack. 

When she became Deputy First Minister this May, Kate Forbes signalled that tax divergence would be kept “under review”. That message was given added urgency following the SNP’s UK General Election performance in July, where it posted its worst result since 2010. 

John Swinney has since spoken of his party’s need to reconnect with “aspirational and middle class” voters while Stewart Macdonald, until July one of the SNP’s most senior figures at Westminster, took to the press in September to publicly warn that his party had paid a heavy electoral price for taxing these voters “with an air of indifference”. 

Conclusions 

What do nearly 8 years of income tax divergence tell us about Scotland’s income tax regime? For a start, the fact that everyone earning more than £28,000 pays more tax means that, objectively, the country is the “highest” taxed part of the UK. But the fears of those who say that higher taxes will make Scotland less attractive have yet to be definitively proven. 

But what about Scotland as the “fairest” taxed part of the country? That’s a much more subjective proposition. Supporters will argue that lower taxes for the lowest paid is a sign of a fairer system, but is that sufficient? Probably not, with it being open season on the future of the public services these taxes help to support and voters beginning to question both what they are receiving in return and the political leaders they have elected to provide them. 

This year at least, it feels as though there is a change is in the air. So, if you are keeping tabs on the impact of the Scottish tax debate, it may now be less of a case of focusing on tax as an input and more on public services and political accountability as outputs. 

Chris reflects on studing the CIPR Professional PR Diploma

What do you see as the key benefits of having the PR Diploma qualification?

Having achieved the Specialist Diploma in Public Affairs in 2019, studying the Professional PR Diploma was an opportunity to round out my day-to-day professional practice with some academic rigour. And I think it helps demonstrate the importance of public relations as a professional discipline.

What has been your favourite part of the CIPR Professional PR Diploma course so far?

Thinking time! As public relations professionals, we are often juggling a variety of different tasks and managing tight deadlines with little time to stop and think. Sometimes it’s good to get lost in textbooks and journals and think through the theory underpinning the work we do and challenge ourselves to keep improving. That gives me confidence in the work I do.

Have you been able to apply any of the learning, and if so, how?

Yes. Previous assignments have been a chance to test new ideas to implement in my day-today work. I’m also thinking more about PR measurement and the opportunities that exist to better demonstrate the value of investing in public relations activities. My confidence as a practitioner has also improved.

Read our Complete Guide to CIPR Qualifications