There was a budget, a Scottish budget.....

I admire Derek Mackay for his brass neck in the budget he managed to get through the Scottish Parliament yesterday.  Though I don’t think much of the content of it.      

On one hand one applauds him as he will increase the starter and basic rate income tax thresholds by inflation in a move he believes will help the lowest paid.      

On the other hand, as economists are fond of saying, with the Scottish higher rate threshold being frozen - unlike in the rest of the UK where the threshold will go up to £50,000 from April - Mr Mackay said his budget would raise an extra £68m in revenue.   Sounds good does it not?

One could and indeed should ask, for whom is he raising it?      

Let’s put this very simply.  If you have £100 in your pocket and I take away £10 today, how much have you left to spend?  £90.  So yesterday you would have been able to spend that in a shop.  Now you will only have £90 to spend.  So the shop keeper will have £10 less income.   

What will that mean?  Well, with less income it means the shop will have to look at what they spend as a business.  Some things will have to give.  So they try and cut their outgoings.  Result?  Redundancies.  Try and make do with fewer staff.   

So the lowest paid Mr Mackay says he wants to help will be out of a job.  Being out of a job  means relying on the government for money.  So the government will have to raise more taxes to help fund the people who are now unemployed.  And as for the business, it will make less profit.  Less profit means less money for the government as taxes are levied on profit.   

What bit of this economic cycle does Mr Mackay and his ilk not understand?