Scottish Government say income tax increase will cost up to £5m extra

Bill Bowman: Negative impact. Picture: Greg Macvean
Bill Bowman: Negative impact. Picture: Greg Macvean
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Putting income tax increases in place will cost up to £5 million extra, the Scottish Government has admitted.

In a parliamentary response to Scottish Conservative MSP Bill Bowman, it was revealed it would cost about £1.5 million a year to run Scotland’s new tax system if bands and rates were kept consistent with the rest of the UK.

However, Finance Secretary Derek Mackay admitted increasing the rates would cost the public purse more. The SNP, Labour, Lib Dems and Greens have all signalled they support tax rises.

He said: “A more significant divergence between the rates and bands that apply in Scotland when compared to the rest of the UK may lead to an increase in costs of up to £5 million.”

Businesses across Scotland have warned income tax rises would hand firms across the rest of the UK a competitive advantage. Others have said the change in behaviour they would cause may even result in less money being brought in through tax receipts.

This week, the Chancellor announced an extra £2 billion of funding for Scotland, a move the Scottish Conservatives said should make the SNP reconsider its tax hike proposals.

Bowman, taxation spokesman for the Scottish Conservatives said: “We already knew the SNP’s damaging plans to hike taxes would hit people in the pocket and harm the economy.

“Now it’s emerged it will be more expensive for the taxpayer too. Derek Mackay doesn’t care about hard workers across Scotland who’ll have to pay more. Nor does he seem bothered about the negative impact business leaders are warning about.

“Perhaps the millions extra it will cost to implement these tax rises will finally put him off this unnecessary and unpopular plan.”

Mackay’s spokesman said: “Tory tax policies would see a further £140m taken from the Scottish budget next year on top of the £500m of frontline resources that their colleagues in the UK Government have cut from the next two years.”