Hard-pressed Scots workers ‘will struggle to cope with tax rise’

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Hard-pressed working people in Scotland will struggle to cope with the impact of tax rises on top of mounting pressures on their pay packets, business leaders have warned.

Rising prices, stunted wages, mortgage hikes and increasing council tax levels has prompted the Scottish Retail Consortium to urge caution ahead of next month’s Scottish budget.

First Minister Nicola Sturgeon gave the clearest hint yet that she will use the Scottish Parliament's powers to increase income tax next year. Picture: PA

First Minister Nicola Sturgeon gave the clearest hint yet that she will use the Scottish Parliament's powers to increase income tax next year. Picture: PA

New research published today shows the average worker in Scotland has seen their wages drop by almost £14 a week to £561.

First Minister Nicola Sturgeon gave the clearest hint yet that she will use the Scottish Parliament’s powers to increase income tax next year. Unveiling an “options” paper last week, it now seems likely that those earning £31,000 will pay more, although a more radical option could see those earning £24,000 hit by a tax hike.

But as inflation soars and interest rates last week saw their first rise in a decade, the pressure on family budgets is mounting. Employee pension contributions will also go up in April from 1 per cent to 3 per cent, and then to 5 per cent in 2019.

Scottish Retail Consortium director David Lonsdale said: “Retail sales in Scotland have consistently been at a low ebb and Scottish ministers have themselves admitted that household budgets are already under strain thanks to a combination of rising inflation and higher council tax.

MSPs ought to be wary about heaping further pressure onto household finances with income tax rises

DAVID LONSDALE

“Consumers’ pockets will be sorely tested further in the months ahead, with higher mortgage payments following the interest rate rise in the pipeline as well as statutory rises in employee pension contributions from April.

“Added to the mix is the Scottish Government’s plan to levy an upfront 20p charge on drinks bottles and containers, which will push up the cost of grocery shopping.

“MSPs ought to be wary about heaping further pressure onto household finances with income tax rises.”

The fall in weekly wages since 2010 to £561 was revealed in new Labour Party research.

Labour economy spokeswoman Jackie Baillie MSP said: “These are deeply troubling figures that show the real price of Tory austerity and the SNP’s failure to protect working people’s incomes.

“Both the UK and Scottish governments should be acting to protect people’s pay packets. The SNP government should develop a robust strategy to lift wages. It is not acceptable to simply point the finger down south. We need a plan to boost incomes in Scotland.”

Labour backs a 1p rise in the basic rate of income tax and a 50p rate for high earners on over £150,000.

The Scottish Government spokesman said Brexit and continuing UK government austerity has led to increasing pressure on public services.

He said: “The time is right for a discussion about how we protect these vital services. That is why we have started a conversation, including the publication of our discussion paper, to look at how best to use our income tax powers.”

The Scottish Government’s tax plans will be unveiled in the budget on 14 December.