MSPs to back tax hikes for high earners in Scotland

Cabinet Secretary for Finance, Economy and Fair Work Derek Mackay. Picture: Jane Barlow/PA Wire
Cabinet Secretary for Finance, Economy and Fair Work Derek Mackay. Picture: Jane Barlow/PA Wire
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Plans to widen the “tax gap” between middle-earners in Scotland and the rest of the UK will scrape through at Holyrood today despite the Greens confirming they won’t support the SNP government.

Greens co-leader Patrick Harvie says the changes in taxation don’t go far enough and wants Scots higher earners to pay more to help offset the chronic budget cuts facing local councils.

The income tax changes for 2019/20 will be passed with the minority SNP administration still having the numbers to out-vote the other opposition parties if the Greens abstain.

It will mean Scots high and middle earners pay hundreds of pounds more in tax than those south of the border. However, a majority of Scots workers (55 per cent) will pay marginally less.

“Green pressure in recent years resulted in the new, fairer system of rates and bands which means lower earners get a break and higher earner pay a more appropriate share,” Mr Harvie said.

“It has brought an additional £500 million into our public services. It’s a modest start and Greens will seek to build on it. We will allow the rate resolution to pass tonight so that the budget deal to protect local services can proceed to the final budget vote.

“The fairer tax system we helped shape will continue to generate additional funds for public services, but it’s still regrettable that the Government didn’t take the opportunity to build on the progress to date.”

The higher rate threshold of 41p in Scotland will be frozen at £43,430 in Scotland, affecting about 367,000 workers next year. Workers south of the Border don’t start paying the higher rate (40p elsewhere in the UK), until they make £50,000 after changes set out by Chancellor Philip Hammond.

It will rase an extra £68m in revenues for public services, according to Finance Secretary Derek Mackay.

“Now is not the time to cut tax for the highest earners at the expense of public services,” he said at the time.

Scots pay no tax on their first £12,500 of earnings in line with the UK-wide personal allowance. A 19 pence “starter” rate than applies between £12,500 and £14,549. Above this the 20p basic rate applies up to £24,944, before the 21p intermediate applies up to £43,430 of earnings. The 41p higher rate then applies on earnings above this level to £150,000, with a 46p top rate above this.

Scots will start paying more in tax at £27,000 than elsewhere in the UK, with a £45,000 salary meaning an additional annual tax bill of £494.

Tory finance spokesman Murdo Fraser said the tax changes break an SNP manifesto pledge not to raise taxes for higher earners.

He added: “We will oppose the Rates Resolution today which can only damage the Scottish economy and our hard-working families.”

Labour want higher taxes for top earner to offset cuts to council budgets. Finance spokesman James Kelly said; that will put services like schools and social care at risk.