Devolution: Salmond takes a gamble on tax

SCOTS WILL become the highest taxed people in Britain if the Scottish National Party wins control of the Holyrood Parliament in May. In a finely balanced gamble, Alex Salmond, the SNP leader, yesterday appealed to the people of Scotland to forego the Chancellor's 1p cut in income tax in favour of spending on public services.

The tax move opens clear ideological water between Labour and the nationalists and, apart from independence itself, will form the key issue of the election campaign.

Mr Salmond said the choice was "between an election penny bribe under Labour or investment in health, education and housing under the SNP". But not all delegates at the party's special conference in Aberdeen shared their leader's confidence in Scots' philanthropy, with one critic saying he had "lit the funeral pyre" of the SNP.

The disclosure came as a surprise to most party activists who had expected Mr Salmond to echo Labour in promising not to use parliament's tax varying powers in the first four years.

Gordon Brown said the plan had been "concocted in the last day or two" and would make hundreds of thousands of Scots worse off. But the Chancellor sounded rattled, betraying a fear that Mr Salmond's gamble may pay off.

From April next year, if Mr Salmond gets his way, taxpayers will be paying 1p in the pound more on the basic rate than those south of the Border. A person on pounds 15,000 a year will pay pounds 2.69 a week more than in England and someone on pounds 40,000 an extra pounds 5.19 a week.

Though the leadership avoided talking of a tax "rise", the only way to keep the basic rate at 23p is if Holyrood votes to levy the extra 1p. The SNP calculates it will raise pounds 230m a year, to be ring-fenced for education, health and housing.

The high-risk strategy enables the SNP to bracket Labour with the Tories as putting tax cuts before services. Mr Salmond cited a recent ICM poll showing 85 per cent of Scots backed using tax powers for defined public services. But conventional wisdom suggests voters' generosity deserts them at the ballot box.

Mr Salmond told delegates the Government was spending less on education in Scotland than the Tories when Michael Forsyth was Secretary of State.

"Gordon Brown thinks that the Scottish election can be bought for pounds 2 a week for the average Scot. Bought and sold for a penny off tax! I think he is wrong." He added that on 6 May the party was "running for gold". An SNP government would offer, within its first four-year term, a referendum on independence, he reaffirmed.

"We are ready to win ... to be a nation again."

Labour rounded on the SNP tax plan with a nervous fury. Mr Brown, meeting businessmen in Edinburgh, said:"The losers would be home-owners, they would be pensioners, young people starting out."

A further worry for Labour is that the move increases the chances of the SNP being able to form a coalition at Holyrood with the Liberal Democrats, who are ready to raise taxes to pay for schools and hospitals.