FMQs: SNP warned tax hikes will damage Scotland's reputation

Nicola Sturgeon was today warned that the prospect of tax rises in Scotland could hit economic growth and damage the country's global reputation as a place to do businesses.

Nicola Sturgeon at FMQs. Picture: Getty Images

The First Minister told MSPs this week that she is to draw up various proposals examining the prospect of raising tax to offset austerity and the likely economic impact, as she set out her Programme for Government

And Ms Sturgeon today refused to rule out the prospect of a rise in the basic rate of income tax as she clashed with Tory leader Ruth Davidson at First Minister's Questions.

Ms Davidson said: "I think anyone earning less than £43,000 a year in Scotland heard the First Minister's message loud and clear - she's coming for your paycheck."

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The Tory leader cited The Scottish Retail Consortium and Scottish Chambers of Commerce who have raised concerns over the impact of possible tax hikes on firms and workers.

"If raising taxes in Scotland damages the Scottish economy and leads to a loss of revenue - as your own manifesto talked about - which is the money we need to spend on our NHS and schools, why would any responsible Government do it?"

The Tory leader warned "punitive tax rates" will not help Scotland match the UK rate of growth after ten years of lagging behind.

"Jacking up taxes on working families and businesses in Scotland will damage the Government's stated objective of getting the economy growing faster and of bringing in more revenue," Ms Davidson added.

"The biggest concern here is over the message that tax rises send out about Scotland's reputation as a place which values ambition, that welcomes business and that want to grow."

But Ms Sturgeon said she would enter the issue with an "open mind" and said it was time to examine ways to tackle austerity.

• READ MORE: Brexit: Westminster acting as if devolution ‘never happened’

"We owe ourselves a genuine debate about what kind of society and economy we want to be," Ms Sturgeon said.

"We know that we face further Westminster austerity imposed by Ruth Davidson's party, we know that we face the implications of Brexit - implications that Ruth Davidson thinks the country might never recover from.

"If we want this country to have the highest quality of public services, well paid public servants, the support and infrastructure that our business need to thrive and if we want to have effective policies to tackle poverty then I think we need to have on honest mature debate about how best to deliver that."

She hit out at the Tories for "sitting on the sidelines calling day in, day out for extra spending" while also calling for tax cuts for the rich.