Scotland has room to tax high earners more says Derek Mackay

Derek Mackay "senses" more scope for tax hikes
Derek Mackay "senses" more scope for tax hikes
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Scots middle earners could face more tax hikes after Finance Secretary Derek Mackay said he "sensed" there is further scope to increase rates.

Mr Mackay will set out his budget for 2019/20 at Holyrood next week.

Scots earning above £33,000 already pay more than elsewhere in the UK following an overhaul of the tax bands introduced by the Scottish Government last year. However, the majority of Scots - about 55% - pay marginally less.

Read more: Derek Mackay defends "fairer" Scots tax system after UK Budget cuts
The tax gap among middle earners is already poised to widen after Chancellor Philip Hammond unveiled to raise the Higher 45 pence threshold south of the border to salaries of £50,000. In Scotland this rate, set at 46p, applies at salaries of £43,430.

Mr Mackay told the Financial Times today that he wants Scotland to have a "competitive tax regime".

He said: "I will always follow the evidence to understand the tolerable levels of divergence. However, I I do not think that now is the time to pass on tax cuts to the richest."

Read more: Bill Jamieson - High risk gamble if Mackay defies Chancellor
The Minister said he is committed to progressive taxation but said he would not raise taxes if this meant lower revenues. Asked if he thought Scotland is still some way from this, he responded: "That is my sense."

The comments come after the CBI yesterday called on Mr Mackay to ensure that the tax gap between Scotland and the rest of the UK does not widen.

Scottish Conservative shadow finance secretary Murdo Fraser said: “This is a clear hint from Derek Mackay that he’s considering even higher taxes for Scotland.

“We’ve already heard from numerous businesses warning against this, pointing out the damage a tax differential would do to Scotland’s economy.

“The SNP government has also been told about the damage to public sector recruitment which could be caused by further tax hikes.

“But these remarks by the finance secretary confirm he simply isn’t listening to these experts on this vital matter.”