The Scottish Government is to use its enhanced borrowing powers “to the max” taking its overall debt to about £1 billion, finance secretary Derek Mackay has confirmed.
As part of the devolution of new post-referendum Smith Commission powers, Scottish ministers will be able to borrow up to £3bn, with a maximum annual limit of £450 million. Borrowing powers have also been available for the previous two years under the Calman Commission powers and the Scottish Government said about £1bn will have been used by the end of 2017-18.
Holyrood’s finance committee grilled Mr Mackay on his spending plans for 2017-18 yesterday.
Mr Mackay said: “In terms of our new powers from the Scotland Act, we will use them to the max.
“Our proposal is to set out further spending plans around borrowing and we fully anticipate using them to the cap of £450m. We do intend to use them over the course of the year.”
He defended the SNP administration’s income-tax plans – the Conservatives have raised concerns Scotland will be the highest-taxed part of the UK.
While the UK government is to raise the earnings threshold for the higher 40p tax rate from its current level of £43,000 to £45,000, the Scottish Government has insisted it will not pass on the “Tory tax cut”. Instead, the threshold in Scotland will rise in line with inflation, initially to £43,430.
Following adjustments to the Scottish block grant, this will raise “around £79m” in revenue for the Scottish Government, the finance secretary said.
Conservative MSP Murdo Fraser said a “differential“ income tax system exists in Scotland.
Mr Fraser added: “There is a risk this sends out a message about Scotland being the highest-taxed part of the United Kingdom and the impact this might have on the ability to attract investment.”
The finance secretary accused Mr Fraser of having “put out quite a negative message” on tax.
Mr Mackay said: “We’re not passing on the tax cut for some of the richest in society, I think that’s the right thing to do.
“But 99 per cent of adults will pay no more tax, given their current level of income, than in 2016-17.
“The message that Scotland is high tax has really been put out by the Conservatives, and I think that is unhelpful when it’s the wider package that is important around taxation.”