The SNP last night looked set to agree a deal with the pro-independence Scottish Greens to save this year’s £30 billion Scottish budget from defeat at Holyrood today.
Greens co-leader Patrick Harvie is demanding extra cash for local councils, but could be ready to drop demands for tax hikes to 60p for high earners. It came after business leaders warned that “punitive” tax hikes will be “highly dangerous”.
MSPs will vote on stage one of the budget today and Mr Harvie indicated yesterday that his party may abstain or back the SNP, allowing the budget to continue to the next stage. The minority SNP government needs support from one other party.
Liz Cameron of the Scottish Chamber of Commerce said: “Now there appears to be a possibility that Scotland’s politicians may consider even more punitive Scottish tax rises in order to secure the passage of the Budget Bill.
“Such a move could prove to be highly dangerous at a time where Scotland’s economy is growing at a third of the rate of the UK as a whole.”
This is the first budget which sees Holyrood takes control over setting income tax rates and bands as part of the post-referendum powers. The SNP’s current plans will make Scotland the highest taxed part of the UK because they don’t pass on the extension of the 40p threshold for higher earners to £45,000, as will happen south of the Border.
Ms Cameron added: “The Scottish Parliament has a new and enhanced position of responsibility in terms of tax in Scotland.
“The sooner our politicians realise that supporting economic growth, rather than hiking up taxes, is the route towards increasing revenues and improving investment in key services, the quicker Scotland will prosper.”
A spokesman for the Greens said talks are ongoing with ministers. He said: “We have set out a range of ways in which ministers can find additional funds to protect local services, one of which is using new powers over income tax to ensure that higher earners pay a little more.
“Greens continue to encourage the Scottish Government to give ground in time for Thursday’s budget vote.”
The plans contain £327 million of cuts to direct council budgets, with fears of the impact this will have on frontline services. Finance secretary Derek Mackay insists other resources will see an additional £240m for services.