UPDATE: Two of Scotland’s leading tycoons, Willie Haughey and Sir Tom Hunter, have expressed their support for a potential temporary income tax increase proposed by the Labour Government. This announcement comes as Labour’s Rachel Reeves prepares to present a Budget that may mark the first rise in basic income tax since the 1970s.
In a shocking twist, Haughey and Hunter stated on their podcast that they could accept a tax hike if it leads to long-term financial stability for Scotland. Hunter remarked, “If Keir Starmer and the Chancellor were to say, look, we need this as a temporary measure to reduce our debt… then a temporary increase in income tax I think people would understand.”
This statement comes amidst growing concerns within Labour about the political fallout from potentially breaking their tax promises. Officials fear that voters could react negatively to any increase, especially so close to the next general election. A worsening financial climate is reportedly prompting Labour to reconsider its stance, leading to speculation about the contents of Reeves’ upcoming Budget.
Haughey, who has donated millions to Labour over the years, emphasized the importance of framing the tax increase as a “temporary” measure. He noted, “If they started to introduce the word ‘temporary,’ people can get behind it.” This sentiment echoes the views of the Tony Blair Institute, which has suggested that any tax increases should be clearly communicated as short-term solutions aimed at stabilizing public finances.
While a tax rise at Westminster would not directly apply to Scotland—where tax decisions are devolved to Holyrood—experts warn that it could lead to a massive £1 billion cut to the Scottish Parliament’s budget. In this scenario, First Minister John Swinney would face difficult choices, such as matching the tax rise or implementing severe spending cuts.
The urgency of these discussions is underscored by the challenging financial landscape facing the UK. Reeves has indicated that sticking to manifesto commitments might necessitate “deep cuts in capital spending,” which could further hinder economic growth.
As this situation develops, all eyes will be on the upcoming Budget announcement scheduled for later this month. Will Labour’s proposed tax increases lead to sustainable economic solutions, or will they alienate voters ahead of the election?
Stay tuned for the latest updates on this critical story as it unfolds.
