High earners could face 50p tax rate in Scotland next year

Derek Mackay said the rise is being considered
Derek Mackay said the rise is being considered
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The Scottish Government is considering putting up taxes for the highest earners from next year, Finance Secretary Derek MacKay has confirmed.

But business leaders and opposition parties have warned that the move could drive away high earners with Scots already facing higher income tax levels than elsewhere in the UK.

Mr Mackay said the government's council of economic advisers was looking at whether a 50p rate for those earning more than £150,000 could be introduced from 2018-19.

First Minister Nicola Sturgeon has recently hinted the SNP could resurrect its support for the reintroduction of a 50p top rate of tax across the UK in the run-up to the General Election in June.

She has faced criticism for failing to use new powers at Holyrood to implement the policy north of the border over fears it could harm Scotland's economy as higher earners seek to avoid it.

Last year, Ms Sturgeon tasked advisers with looking at the issue on an annual basis to see whether the risk could be mitigated.

Labour MSP Anas Sarwar asked the Finance Secretary to set out the government's current position.

Mr Mackay told MSPs at Holyrood: "In February, the Scottish Parliament endorsed this Scottish Government's proposal that the additional rate of income tax should be maintained at 45p for the tax year 2017-18.

"Analysis produced by the Scottish Government showed that there is a revenue risk associated with raising the additional rate.

"However, the First Minister has asked the council of economic advisers to consider how and to what extent this risk can be mitigated, and if we are sufficiently assured that it can be, that we consider raising the additional rate from 45p to 50p from 2018-19 onwards as part of budget considerations."

Scottish Conservative shadow finance secretary Murdo Fraser said Scotland is already the "highest-taxed part of the UK" after the higher 40p rate was frozen at £43,000, while rising £45,000 in the UK.

Mr Fraser said: “This damaging move would take that to a new level.

“There is absolutely no reason why Scots should have to pay more tax than other workers across the UK.

“Increasing taxes will punish workers, harm the economy and raise less money, and the SNP would be making a huge mistake if it adopted this policy.”

“There may only be around 17,000 Additional Rate taxpayers in Scotland but collectively they contribute around 14% of total income tax revenues. These individuals, and their wealth, is very mobile and any move to increase the Additional Rate of Income Tax may well be counterproductive in terms of the Scottish Government’s desired effect on tax revenues. Many Scottish taxpayers are already paying more to the government than equivalent earners elsewhere in the UK. Instead of threatening tax hikes, the Scottish Government should instead be doing its level best to make Scotland as attractive as possible to the investment and talent that we require to get our economy back on track.”