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Two of Scotland’s top tycoons have said they could back an income tax rise in the Budget if the hikes are temporary. Labour peer Willie Haughey and Sir Tom Hunter said they could live with an increase by the Labour Government so long as the country is better off in the long term . Rachel Reeves is poised to become the first Chancellor since the 1970s to raise the basic rate of income tax in her Budget this month . She ruled out increasing the rates ahead of the general election, but a worsening financial climate will reportedly lead to a u-turn. A rethink has worried senior Labour figures who fear voters will not forgive the Government for breaking their flagship tax promise. Haughey and Hunter, who between them have decades of experience in the business world, offered a different view on the podcast they co-host. Hunter told the podcast: “If Keir Starmer and the Chancellor were to say, look, we need this as a temporary measure to reduce our debt, we are going to try our very best to put the environment for company growth and we are going to look at how we spend your money…..then a temporary increase in income tax I think people would understand.” The philanthropist also said he was “quite relaxed” about the prospect of Labour breaking a manifesto promise. Haughey, who has donated millions to Labour over the years, said: “I think you used a word there that nobody’s used, and I think if they started to introduce the word ‘temporary’ people can get behind it.” Haughey likened a short-term tax rise to the last Tory Government increasing, then cutting, national insurance contributions. He added: “I am delighted to hear that she [Reeves] said that it’s about a sensible Budget that the country needs, rather than a Budget for political expediency. But you have to explain that to the people. “She’d have to demonstrate that this hurt that everybody is taking is great in the longer term.” Hunter made his fortune when he built up the retailer Sports Division, while Haughey is best known for founding the successful City Refrigeration firm. An income tax rise at Westminster would not automatically apply to Scotland as this lever is devolved to Holyrood. But experts have estimated that an income tax hike south of the border could lead to a £1bn cut to the Scottish Parliament’s budget. First Minister John Swinney would be left with options such as matching the tax rise or cutting spending. The views of Haughey and Hunter echo the stance of former Labour Prime Minister Tony Blair’s think tank. A paper by the Tony Blair Institute said: “If the Chancellor opts for a larger revenue-raising step – particularly a manifesto-breaching increase in income tax or value-added tax (VAT) – she should make clear that it is temporary and conditional: a short-term measure to stabilise the public finances, not a permanent shift in direction.” The TBI argued for “targeted tax cuts before the election” once growth strengthens and public service reforms deliver results. Reeves told the BBC this week: “It would, of course be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending and the reason why our productivity and our growth has been so poor these last few years is because governments have always taken the easy option to cut investment." To sign up to the Daily R ecord Politics newsletter, click here
