THE economist Adam Smith, like the poet Robert Burns, is a historical figure politicians love to claim as one of their own. Over the years leaders as ideologically varied (or actually perhaps not that varied) as Margaret Thatcher, Gordon Brown and Alex Salmond have sought to take ownership of his economic and political legacy.

In a recent speech to the Adam Smith Institute (ASI), Scottish Tory leader Ruth Davidson sought to reclaim the Wealth of Nations author from what she jokingly called the Gordon Brown and Alex Salmond “methods”, the purloining of his economic theories to justify their respective political agendas.

Smith, of course, more than warrants such intellectual flattery, not least his four maxims concerning taxation. The first, often quoted by Finance Secretary John Swinney, holds that “subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities”.

This, the principle of “ability to pay” in modern political parlance, will loom large over the next few months, in relation not only to national rates of income tax – a new “Scottish” rate will come into being next April – but also local taxation, with a cross-party commission working its way towards a replacement for the Council Tax.

Each presents acute political problems not just for the governing SNP but for opposition parties too. While Ms Davidson did not actually propose a tax cut in her ASI speech, recent Scottish Conservative mood music suggests that’s likely prior to next year’s Holyrood election.

The Conservatives have opted not to co-operate with the Scottish Government’s Commission on Local Tax Reform, fearing they’ll end up bound to a set of recommendations they don’t actually agree with (although that didn’t stop the SNP with the Smith Commission). Instead they have their own Commission for Competitive and Fair Taxation in Scotland chaired by the former CBI Scotland director Sir Iain McMillan.

This is examining both local and national taxation, considering how best to use “existing and new tax powers to boost economic growth in Scotland”.

Now, by early next year “existing” powers will include the ability to set 10 pence within each income tax band, while forthcoming “new” powers will extend that to complete autonomy over income tax rates and bands north of the Border. It therefore falls to the Scottish Government to say what it will do with the new “Scottish” rate. Normally that would have happened during September with publication of the draft Budget, although it emerged yesterday this process will now be delayed by months for the legitimate reason that a lot will depend on the Chancellor’s autumn statement due in late November. But the delay also gives the SNP time to figure out what it wants to do. When it comes to taxation it hasn’t exactly been bold: only back in 1999 did it fight an election on a tax-raising platform – the so-called “Penny for Scotland” – but since then the party has consistently played down income tax as a potentially transformative fiscal lever.

Asked about redistributing wealth via the Scottish Government’s forthcoming powers Nicola Sturgeon usually demurs, and it seems unlikely she’ll give much away in tomorrow’s legislative programme. Partly this is wariness at a perceived Unionist trap; as the Treasury pointed out in a statement yesterday, if the SNP wishes to raise additional revenue, it will soon have “much greater scope than ever before to do so”. Mr Swinney, however, has a useful get-out clause, at least at the moment: for if he increases one rate of income tax, every other band has to go up by the same amount. Such a move would clearly be regressive, thus contravening Adam Smith’s first maxim, so I’ve predicted before – and I remain convinced this is the case – as of 6 April, 2016 the Finance Secretary will make it clear there’ll be no change.

Politically, doing so ahead of an election in which the SNP wants to retain an overall majority would be sensible, albeit a missed opportunity. Mr Swinney could, for example, kill two birds with one stone by announcing an income tax cut in all three bands, which could both incentivise economic “growth” via a reduction in the upper rate, while boosting the income of lower earners. A quid pro quo in terms of local taxation could also make this neutral in revenue terms.

Usefully, the Scottish Government’s favourite economist, Joseph Stiglitz, recently set out a similar tax “shift” in a working paper for the National Bureau of Economic Research in the US. His analysis suggests that corporate income taxes are the most detrimental for economic growth, followed by personal income taxes and with recurrent levies on immovable property (land or buildings) being the least harmful.

Thus Prof Stiglitz concludes that “a growth-oriented tax reform would…shift part of the tax burden from income to consumption and/or residential property.” Now, the Scottish Government frequently talks about “growth”, both as a virtue in itself and as a means of tackling the deficit without resorting to austerity economics, so why not facilitate that by recasting Scotland’s local and national taxation? To borrow a phrase, it could even become a “progressive beacon” for the rest of the UK.

Of course none of this would be easy, not least in political terms. Since 2007 the SNP has created a narrative that says local taxation should be based on the ability to pay, and that might prove difficult to escape, although a (modest) national tax cutting agenda coupled with a bold attempt to resolve the long-running saga of local taxation at least stands a chance of attracting cross-party support.

As Ms Davidson put it in her speech, it’s always been a “myth” (or at the very least an exaggeration) that Scotland is a “socialist” nation. And while the new party RISE (launched in Glasgow a few days ago) is yet to set out a detailed policy agenda, it’s probably safe to assume it’ll include tax rises for the rich, something the new Scottish Labour leader Kezia Dugdale has also floated in recent weeks.

But lined up against that approach will be the Scottish Conservatives, and perhaps also the SNP, which will finally have the opportunity to put flesh on the bones of often astonishingly thin economic rhetoric. Mr Swinney already has a deserved reputation for diligent financial management, but this is his chance not only to call the Unionist parties’ bluff but also become renowned as a genuinely reforming Finance Secretary.

The ideological dam has to burst eventually: the eight-year-old Council Tax freeze is costing billions and stymying local authorities’ room for manoeuvre, while the three decades-old Thatcherite (and Blairite) consensus on income tax, shared by many Nationalists, is in urgent need of a fiscal reboot. I’m quite sure Adam Smith would approve.