Reform hits out at IFS analysis of Scottish tax plans

Reform UK leader in Scotland Malcolm Offord has hit out at a respected think tank’s analysis of his tax plans.

Earlier this year, Lord Offord said a Reform government in Scotland would re-align the country’s income tax with the rest of the UK, before bringing in a 1p-in-the-pound cut, at a cost of £2 billion.

Subsequent cuts amounting to 3p would cost £3.7 billion annually in the first parliamentary term, the party has said.

Reform said its cuts would stimulate economic growth, with each percentage point bringing in £8 billion of additional tax revenues every year.

But on Friday, the Institute for Fiscal Studies (IFS) described the plans as “not fiscally credible”, saying each point of economic growth would bring in just £300 million for Scotland.

“The ‘self-funding’ tax cuts are therefore a mirage created by a misunderstanding or misrepresentation of the current devolution settlement and incorrectly comparing cumulative and annual figures,” said David Phillips, the head of devolved and local government finance at the think tank.

“This is not good enough.

“The analysis of the potential revenue effects of the headline income tax cuts is unserious at best.”

Writing in the Daily Express on Monday, Lord Offord described the IFS as a “siren voice of the status quo” and an “oracle to be obeyed”.

“In the world of the Holyrood bubble, it is an essential rule that if you want to be in the club, you don’t challenge the wisdom of the IFS,” he wrote.

“So, it was no wonder that they have immediately come out against Reform’s plan to slash Scotland’s high taxes.

“Under our plans, unveiled last week, we would press ahead with a major tax cut for Scots for the first time in 25 years, by getting rid of the SNP’s extra tax bands and going further to drop income tax rates 1p below that of the rest of the UK.

“The nub of the IFS argument rests on the principle that tax cuts don’t really have any impact on incentivising growth in the economy.

“Serious economists, including one Arthur Laffer, would take major issue with this subjective view. The IFS argue that it is simply too difficult to cut £2 billion out of £72 billion, representing just 3% of the Scottish budget.”

The former Tory peer has said the funding would come from cutting the number of public sector bodies – suggesting scrapping all of them and bringing back those which are deemed necessary – along with “ideological spending” on issues like net zero.

“I reject this decline mindset, because doing nothing is simply untenable,” he said.

Responding to the attack, Mr Phillips said: “For both myself and the IFS more widely, independence and impartiality is vital to impact.

“We analyse all major parties’ manifestos without fear or favour and have been critical of others, too.

“Our 2021 Scottish election summary, for instance, said that a ‘lack of credibility unites manifesto offering of three biggest Scottish parties’.”

He also pointed out that the think tank praised the pledge to reform the Land and Buildings Transaction Tax (LBTT) and business rates, adding: “The bottom line is that tax cuts of the scale proposed by Reform UK Scotland are perfectly possible – but they would not pay for themselves, and in the context of a Scottish budget already under pressure would almost certainly require cuts to at least some frontline services or benefits.

“We would say this about such plans, whichever party put them forward. Our aim is to inform debate not single anyone particular out.”

Lord Offord also described the Scottish Tories as “irrelevant” in this election campaign.

Speaking to the Press Association on Monday, party leader Russell Findlay said: “Anyone that starts to question the validity or the independence of the IFS is just confirming the failures of their own argument, the flaws in their own case.

“What the IFS have said is that the tax proposals being put forward by Lord Offord and Reform just aren’t credible.

“It’s there for all to see – that’s why he’s kicking back, lashing out at the IFS which, again, just confirms their lack of credibility.”