With October 20th and the detail of George Osborne’s Spending Review now less than one week away, the pressure on Finance Secretary John Swinney to point out where the requisite savings in Scotland’s budget will be made is building. Education Secretary Mike Russell has tried to take the sting out of the growing media focus on the spending problems facing Scotland by delaying a decision on university funding until after the election. However, procrastination of the big decisions will not work forever, particularly as the SNP has stated a big generous giveaway for the next parliamentary term in the shape of a continued Council tax freeze, a decision that has led to much of the press, unfairly I reckon, to attack the SNP’s supposed ‘lack of wisdom’.

It is difficult to predict where in Scotland’s budget a largely left wing public would accept significant slicing, particularly when the cost of policies is difficult to pin down (does abolition of student fees cost £15m or £1.5bn?). Consequently, if savings simply politically can’t be made, the growing pressure will result in having to let off some steam through tax rises.

Is it for financially squeezed moments like these that Scots decided to give the Scottish Parliament tax-varying powers for? Should political parties start looking at raising tax by 1p or 2p in the pound north of the border? It would be an enormously difficult decision.

Again, the numbers are hazy, but an undated Scottish Office document states that raising income tax by 1p in the pound would raise around £150m a year. I am, of course, happy to be corrected on that but if it is pensioners, students and the unemployed who deserve the most protection from cuts, then surely the employed are fair game. The question is, who is most likely to adopt this high-risk strategy in the election campaign.

For me, the SNP would be the most likely of the main five parties to resurrect their ‘tartan penny’ tactic from the 1999 election campaign. Alex Salmond has the most to lose from reversing policies that he presided over in the past four years and, over and above potential reversals, the FM will struggle to avoid committing to policies such as tuition fees, free care for the elderly and the latest Forth Bridge before May 5th. Increasing tax may well be the least worst option as the SNP seek to find that coveted fine line between financial credibility and public popularity.

The Lib Dems may join the SNP in pushing for an increase in tax rates, rekindling the party’s ‘Penny for Scotland’ campaign of 1999. Tavish Scott needs something as he must be keen to mark his party out in this election campaign for fear of anonymity or, worse, being seen only as Cameron’s little helpers down south. Mimicking an SNP penny in the pound would mark them out as frontrunners for coalition partners.

The Green Party may also consider campaigning on this extra tax. It’s not my position to say but investment in a renewable industry, keeping tuition fees abolished and bringing housing stock up to a higher standard of insulation appear to be top priorities, and expensive ones too.

The Conservatives, needless to say, will not be in favour of a tax rise in Scotland. The UK Tories preferred an austere 80/20 blend of cuts/tax rises to combat the deficit and will no doubt continue to ‘trust hard working families to spend their own money rather than the state’. Pah, the Scottish Government Finance Secretary can spend our hard-earned money better than any of us, everyone knows that… (I jest, sort of)

Labour, I would expect, will be staunchly against any use of the tax varying powers which would throw up an interesting dividing line for the voters if they had the choice of the SNP (higher income rates and frozen Council tax) or Labour (consistent income rates and increased Council Tax). Iain Gray would doubtless try to attack the SNP as both ‘cutters’ and ‘tax raisers’ which, while incongruous to me, may well go down well with certain parts of the electorate.

In short, will the 2011 election be 1999 all over again?

I personally hope so but with a different result. Scotland can be bold, brave and follow Finland and Sweden down the path of high tax, wide provision services, all the while climbing the regular ‘happiness indices’ that Scandinavian countries find themselves near the top of as a direct result of their relatively higher taxation levels.

(Update – It seems the SNP has already categorically denied raising income tax rates in the Parliament chamber, in response to a direct question from Lord George Foulkes. Courtesy of NewsnetScotland. I still have the Nats favourite to increase the income tax though. It is, after all, the right thing to do….)