In responding to the content of the Pre-Budget Report, the Scottish Trades Union Congress (STUC) welcomed the Chancellor’s announcement of reductions in VAT to boost demand in the economy and the commitment to raise the higher rate of tax for those earning in excess of £150,000 a year.
STUC General Secretary Grahame Smith said:
“Today’s measures will go some way to providing the short-term stimulus our economy needs. The new direction of travel signified by the proposed rise in higher rate tax is welcome but it should be brought in immediately. The protection of low paid workers from the future national insurance contribution rises is also welcomed. Far more will need to be done in the medium term to ensure that accumulated public sector debt is paid for by those who can most afford to do so. A national and international response is required for the problem of tax avoidance which costs the UK economy £14 billion every year.”
“The plans for investment in home insulation and other low carbon measures are very welcome but should have been part of a wider package of measures similar to the “New Green Deal” proposed by Barack Obama.”
However, STUC voiced concern over plans for an additional £5 billion in public sector efficiency savings.
Grahame Smith said
“It is difficult to see how these savings will be achieved without cuts in jobs and services. Unemployment is unemployment whether caused by private sector contraction or public sector contraction and, as was the case with the last two UK recessions, any cuts in services will only serve to accentuate the longer term damage to our economy.”
Smith also criticised the Conservative Party response to the Pre-Budget statement
“The ‘suffer now - suffer later’ response of the Tories to today’s announcement is a counsel of despair. Scotland is still suffering the effects of the Tory response to the last recession through our low levels of growth and pockets of extreme deprivation. There is nothing in what the Tories said today which suggest it would any different this time.”
ENDS
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Notes: The poorest fifth of UK households pay 36.4% of their income in taxes: 9.5% in direct taxes and 26.9% in indirect taxes. The top fifth pay 35.5% of their income in taxes: 24.7% in direct taxes and 10.8% in indirect taxes.