Derek Mackay defends "fairer" Scots tax system after UK Budget cuts

Derek Mackay has hit out at Tory tax cuts for the "richest in society."
Derek Mackay has hit out at Tory tax cuts for the "richest in society."
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Scotland's Finance Secretary has indicated he won't follow the tax cuts to Middle earners set out in yesterday's UK Budget as he defended the "fairer" income tax system north of the border.

Derek Mackay accused the Tory Government at Westminster of implementing tax cuts for the "richest in society" after the budget yesterday extended the number of workers across the rest of the UK who now escape the 40 pence "Higher" rate.

He also dismissed claims of a £1 billion boost for Scottish public spending as a result of the budget, insisting Scotland has lost out by double this amount during the years of austerity.

The Scottish budget will be unveiled by Mr Mackay on December 12.

Read more: Tax divide between middle earners in Scotland and England
But, responding to yesterday's UK Budget, The SNP minister told MSPs at Holyrood today: "I take some pride in the fact that I've been the Finance Secretary that's ensured the fairest income tax system anywhere in the United Kingdom and for a majority of people they pay less tax and this is the lowest taxed part of the UK.

"The Tories have once again chose tax cuts for the richest in society - we will choose a fairer , a more progressive path. I will set out a fairer, a more progressive path."

Income tax rates and bands are now devolved to Holyrood and an overhaul of the system was introduced by the Scottish Government last year.

Read more: Chancellor Philip Hammond claims ‘austerity has come to an end’
Mr Hammond yesterday increased the personal allowance for all workers across the UK to £12,500. But the Chancellor’s extension of the 20 pence basic rate to cover more workers will not apply to Scots. The proposal to restrict the 40pence higher rate south of the Border to salaries of £50,000 and above will be introduced next April, a year earlier than planned. It means all workers earning less than this will pay only the 20p rate.

In Scotland, workers start paying Holyrood’s new higher 41p rate on a significantly lower salary of £44,300 in the tax regime unveiled by the Scottish Government last year. The new system in Scotland is estimated to raise an extra £219 million of public spending.

Mr Mackay also played down the impact of almost £1 billion of additional spending which will come to Scotland as a result of yesterday's budget.

"I don't welcome the figures that have been announced by the Chancellor because it represents - just putting NHS aside for one moment - real terms reductions for the rest of Scotland's public services," he said.

"And in relation to the National Health Service, the Tories promised £600 million and within four months they're already short changed the NHS in Scotland by £50 million.

"It doesn't undo the damage of the last eight years of Tory Government, it doesn't undo the £2 billion real terms reduction that we've endured and it doesn't undo the pernicious welfare reform that's pushing so many people into poverty.

"So, no I don't welcome that."

Tory Finance spokesman Murdo Fraser hit out at the Finance Secretary's "miserable" response the Chancellor's announcement's yesterday.

“Yesterday’s UK Budget handed the SNP Government an extra £950 million, froze duty on whisky and petrol, supported our oil and gas industry, delivered a £130 a year tax cut for every worker in Scotland, and gave the NHS in Scotland the biggest funding boost in over a decade," he said.

“Yet Derek Mackay could not bring himself to welcome a single one of these measures. His miserable response speaks volumes.

“The SNP must stop the shroud-waving and act.

“When even Labour’s John McDonnell agrees that taxpayers deserve a break, surely it’s time for Derek Mackay and Nicola Sturgeon to listen.

“Scotland needs a competitive tax regime and the Scottish Conservatives will be demanding that the SNP delivers.”