Labour unveils plan for big tax rises in bid to raise £1bn

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Labour has unveiled radical plans for a £1 billion tax-raising drive that would see Scots earning more than £60,000 facing hefty hikes.

The proposals would also mean a £100 million hit for pubs and clubs as part of a new “social responsibility levy” on each drink sold, while new taxes on tourists and land lying vacant would be introduced. 
Labour leader Richard Leonard said the hardline approach, which includes a new 50p top rate of income tax, is needed to end the “failed experiment” of austerity.

Scottish Labour leader Richard Leonard. Picture: TSPL

Scottish Labour leader Richard Leonard. Picture: TSPL

But the plans were branded “fantasy figures” by Finance Secretary Derek Mackay, who insisted the proposals would raise far less than claimed.

MSPs will tomorrow debate the Scottish Government’s proposed budget, which already includes proposals to make higher earners pay more while low earners would get a modest cut.

Labour said their alternative spending plans are a “budget for real change”.

Mr Leonard said: “It is time to end the failed experiment of austerity by making radical use of the powers available to the Scottish Parliament.

“When we campaigned for a ­Scottish Parliament, we saw it as a bulwark against Tory austerity, but in recent years it has simply been a conveyor belt for cuts. That needs to end.

“Labour is willing to ask the wealthiest few to pay more to benefit the many and redistribute real economic power to local communities.

“The question now for other parties is do they agree with us?”

The income tax plan matches the Scottish Government’s starter rate of 19p, but places the income threshold for a 
45p rate at just over £60,000 and introduces a new 50p top rate for those earning over £100,000.

Under the government’s draft budget, a 46p rate only kicks in for earnings over £150,000.

Ministers said their income tax policy is expected to raise an additional £164m.

Labour quoted analysis from the Scottish Parliament Information Centre (SPICe) estimating their plans would raise an extra £540m.

Labour also wants to give councils the power to introduce a tourist tax on hotel stays, currently being considered in Edinburgh, and a land value tax on economically inactive land. The party also proposes a social responsibility levy for licensed premises and the full use of non-domestic rates income.

These measures would raise a further £422m, meaning Labour’s plans would raise an extra £960m.

The bulk of the extra funding – about £545m – would go to local councils to boost cash-strapped frontline services like social care and ensure council staff do not miss out on the end to the public sector pay cap.

More than a quarter of a million pounds would be allocated to fund a £5 child benefit top-up, with £100m of extra NHS funding and a fully-funded public sector pay increase.

But Mr Mackay insisted the proposals were “riddled with factual blunders”.

He added: “Not only would their plans raise far less than they claim, even where they will raise some revenue, for some of their suggestions that money won’t be available for years.

“That’s not much use to hard-pressed families looking for a tax cut now or public sector workers hoping for a pay rise in April.

“Critically, Labour’s income tax plans clearly do not take account of behavioural change, which, given the 
sheer number of people who would be affected, would run into tens of millions of pounds.”

The Finance Secretary added the tourist tax and land value tax proposals would not raise “a single penny next year” because both required new laws to be passed at Holyrood. The land value tax would also require a Scotland-wide ­valuation to be carried out.

Conservative finance spokesman Murdo Fraser added: “Like the SNP and the Greens, it seems Labour’s only idea for generating more cash for public services is hammering hard workers.”

Greens co-convener Patrick Harvie said: “The SNP now have a wide range of options for going beyond their own tax plans – some from the Greens and some from Labour.

“If they intend to raise the revenue needed to protect local services, they’ll need to accept at least some of what the opposition parties have proposed.”