Leaders’ debate: Sturgeon confirms 50p tax rate still a possibility

The party leaders' debate was dominated by tax issues. Picture: Getty Images
The party leaders' debate was dominated by tax issues. Picture: Getty Images
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Nicola Sturgeon has said she wants to impose a 50p tax rate on the highest earners in the next parliament, despite warnings it will cost Scotland £30 million.

The SNP leader said that she would instruct her expert group of economic advisers to examine raising the tax rate on those who earn more than £150,000 each year – offering her clearest signal yet that she intends to introduce the levy.

We don’t think the people of Scotland should have to pay more tax than the rest of the UK

Ruth Davidson

Labour’s Kezia Dugdale has already said her party will use the new powers over income tax bands and rates to raise the top rate from its current level of 45p to 50p.

Until last night, the SNP had declined to follow Labour’s example on the grounds that taxing the highest earners more in Scotland than the rest of the UK would encourage them to leave the country thus reducing the tax take.

Speaking on the first televised leaders’ debate of the Holyrood election campaign, Ms Sturgeon indicated she was prepared to change her stance.

“I’ve said we won’t do it in the first year we have powers, I haven’t ruled it out for the rest of the parliament,” she said. “And the reason for that is I have got independent civil service analysis saying it might lose us £30m.

“Why is that the case? Because under devolution, unlike under independence, yes we will get the power to set the tax rate but we don’t get the power to set the rules of avoidance.

“I would ask, if I’m re-elected, the First Minister’s Council of economic Advisers to look at this on an annual basis to see if we can find ways of mitigating that risk and we will judge it in our Budget every year.”

Ms Sturgeon was then pressed on the issue by Glenn Campbell, the chairman of last night’s BBC Scotland Scottish Leaders’ Debate 2016. He asked the First Minister if she would like to make the change.

• READ MORE: Sturgeon: ‘SNP rivals not taking election seriously’

She replied: “I think there should be a 50p top rate of tax but you don’t set tax rates if it’s going to lose you money. I don’t want to turn around in two years’ time and say we’ve got less money to spend on our health service.”

Ms Dugdale has said raising the rate to 50p would raise between £65m and £110m, which a Labour Scottish Government would spend on education.

With the Scottish Parliament receiving new powers over income tax bands and rates as a result of the Smith Commission, the first televised encounter between the Holyrood leaders was dominated by tax.

Ms Dugdale confirmed her party’s policy to raise income tax by a penny across all bands, and claimed Ms Sturgeon’s tax policies were not substantial enough to mitigate the cuts coming to Scotland.

“We would ask the richest to pay a bit more, ask those people who earn £150,000 a year to pay a 50p rate,” Ms Dugdale said. “Something Nicola Sturgeon used to stand for is something the Labour Party will do.”

The Scottish Labour leader’s attempts to dismiss the SNP’s tax plans saw Ms Dugdale say she could not believe that Ms Sturgeon, the “great crusader against Tory austerity” appeared opposed to raising the top rate of income tax on the grounds that “rich people would avoid paying it”.

Conservative leader Ruth Davidson repeated her party’s commitment to pass on the tax break for higher earners announced in George Osborne’s Budget to Scotland. The SNP has said it will not implement the plans to raise the higher earner threshold to £45,000 from £42,385.

Ms Davidson said: “We have an absolute principle: we don’t think the people of Scotland should have to pay more tax than the rest of the UK and we don’t think it’s good for Scotland either.

“Hanging a sign at the Border that says ‘higher taxes here’ encourages neither the growth, the investment or the jobs that we need to properly fund our public services.”

Scottish Green co-convener Patrick Harvie said his party would set out its detailed tax plans next week, but stressed that Scotland needs “to be ready to scrap the council tax”.

He added: “We certainly need to raise the revenue that we need to prevent the cuts.”

Mr Harvie argued the new powers were an opportunity to take Scotland in a “different direction” by raising tax for public investment in sustainable housing, investment and infrastructure.

“The market would not do that,” Mr Harvie said.

His vision saw Ukip’s David Coburn remark that there were a lot of “clever accountants” who would help people “re-register” themselves south of the Border for tax purposes.

“People are not going to stay in Scotland and be plucked like a capercaillie,” he said.

• READ MORE: Accountancy body calls on Holyrood to simplify tax system

Ms Davidson found herself tackled on the chaotic Conservative Budget and the hugely controversial decision to cut benefits payments to the disabled – followed by a U-turn.

Following the resignation of Iain Duncan Smith in protest at George Osborne’s cuts to Personal Independence Payments (PIP), Ms Davidson was asked why she had not spoken out against the cuts.

Ms Sturgeon criticised her for not making her position clear before Mr Duncan Smith’s resignation. Ms Davidson said: “I thought the way they were going about it was wrong.

But the SNP leader countered, saying she was “absolutely and utterly disgusted” by the treatment of disabled people by the Tories.

“I am not a fan of Iain Duncan Smith, but at least he found it within himself to resign. Ruth Davidson has said nothing.

“I don’t think there should be any further cuts to disabled benefits. I don’t think we should be balancing the books on the back of disabled ­people.”

With the SNP expected to romp home on 5 May and Labour and the Conservatives almost neck-and-neck in the race for second place, both Ms Dugdale and Ms Davidson attempted to position themselves as leader of the official opposition.

Ms Dugdale also tried to present herself as a credible replacement for Ms Sturgeon, claiming she had her eyes on the First Minister’s office furniture. The Scottish Labour leader said she wanted Ms Sturgeon’s “desk”.

“You can have the desk, you are just not getting the job,” Ms Sturgeon retorted.

With fracking emerging as a key issue of the election campaign, Ms Sturgeon appeared to move her party closer to backing a ban on the practice.

The SNP’s official position is for a moratorium on fracking, which will give the Scottish Government time to examine the scientific evidence for and against the controversial gas extraction technique.

She said: “There is no fracking allowed in Scotland right now and unless it can be proved beyond any doubt that it does not harm the environment, no fracking should be allowed at all in Scotland.

“We want to see the evidence in place and we will take the decision on that basis. But if there is any suggestion that it harms the environment, there will never be any fracking in Scotland as long as I have got anything to do with it.”

Ms Davidson confirmed the Conservatives’ pro-fracking position, saying Scotland had the best safety rules in the world and as long as they were in place fracking could “contribute to our energy mix”.

Lib Dem leader Willie Rennie found himself in the awkward position of trying to defend his anti-fracking stance, despite party members voting in favour of lifting the moratorium on unconventional gas extraction.

He said: “I am leader of the party I have set the policy.”