Scottish Labour intends to deny higher earners income tax breaks to offset George Osborne’s tax credit cuts, it has emerged.
Today Scottish Labour leader Kezia Dugdale will announce a new policy to use new Holyrood powers to reverse the UK government’s controversial tax credit cuts.
The policy is to be unveiled in her speech to the Scottish Labour conference in Perth.
Labour said it was to be funded by not going ahead with the SNP’s plans to abolish Air Passenger Duty, which would cut £250 million from the tax take.
Ms Dugdale will also refuse to implement Conservative plans to raise the higher rate income tax threshold from £43,600 to £50,000.
According to Labour, raising the threshold would reduce revenues by £440m in Scotland. Labour argued that tax credits could be financed by retaining that cash in the Scottish budget. If Ms Dugdale were to succeed, a taxpayer earning £50,000 in Scotland would be £1,280 worse off each year at the end of the decade than someone on the same salary south of the Border.
Ms Dugdale will challenge the SNP to match Labour on its tax credit plans arguing that those who claim to be anti-austerity need to prove it by their actions when in power.
Ms Dugdale will say: “It is easy to rail against austerity, to pose as a socialist when no-one ever asks you how you will pay for the fairer future you claim to believe in.
“The political posturing has to end with the new powerful Scottish Parliament and the power for change. A fairer Scotland isn’t one where everyone pays more tax. In fact we want hundreds of thousands of working Scots to pay less tax.
“That is what we did the last time Labour had the power to change things. Tax credits were a tax that worked, using the system to boost people’s earnings.
“They lifted hundreds of thousands of children out of poverty.”