"THE Scottish Conservatives are preparing to go into the 2007 election with a radical pledge to cut the basic rate of income tax by 3p in the pound, The Scotsman has learned.
Party researchers have been told to come up with ways of funding the income tax cut, which would then be adopted as the centrepiece of the Scottish Tory manifesto for the next Holyrood election.
The Scottish Parliament has the power to vary the basic rate of income tax by up to 3p in the pound, up or down - the so-called Tartan Tax - but it has never been used. A 3p in the pound cut would save someone on a £25,000 salary £540 a year or £45 a month.
Using the Tartan Tax at the full 3p in the pound would cost the Executive about £750 million in lost revenue. Taken together with the Tories' existing commitment to cut business rates by £140 million, it would take almost £900 million from the Scottish block grant. "
Tax cuts imply reduced public spending (at least by comparison with what would be otherwise planned). £900 million per year is a rather greater sum than could be achieved by making bureaucratic savings, espacially if Tom McCabe has already taken an axe to public administration. And while £900 million may not seem a lot in relation to the £26/27 billion that the Scottish Executive will have to play with, much of the latter is committed to health (where cuts are probably politically untouchable) and local government spending (where cuts can spill over into increases in council tax). If the Conservatives are serious about cutting income tax, they will need to be precise about the areas of expenditure to be forgone.