Tax plans outlined by Jackson Carlaw could 'cost Scotland £270 million'

The current interim leader of the party launched his bid to take over the reins full-time this week.
The current interim leader of the party launched his bid to take over the reins full-time this week.
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Tax plans outlined by Scottish Conservative leadership candidate Jackson Carlaw could cost Scotland £270 million, according to analysis.

The current interim leader of the party launched his bid to take over the reins full-time this week, promising to bring taxes for "middle Scotland" in line with the rest of the UK.

Scots on incomes between £27,000 and £43,430 currently pay up to £150 more in tax than people in the rest of the UK, while those earning between that mark and £45,000 stump up an extra £500.

• READ MORE: Jackson Carlaw unveils tax cut plan as he launches Tory leadership bid
However, the Fraser of Allander Institute (FAI) think tank said in a blog post that Mr Carlaw's proposed changes "might be seen as puzzling" after its analysis showed it would most benefit those earning £43,430 and above.

The post suggests the policy, which Mr Carlaw would only be able to implement in the 2022/23 financial year and after a win in the 2021 Holyrood election, would benefit the top 20 per cent of earners most.

The analysis concluded: "A policy framed as supporting 'middle earners' predominantly benefits households at the top of the distribution of household income."

Scotland's intermediate rate is currently 1 per cent above that of the rest of the UK at 21 per cent, following the devolution of income tax powers to Holyrood.

The analysis said: "If this policy was implemented in 2020/21, it would reduce the government's income tax revenues by around £270 million."

However, the think tank does state an uptick in jobs caused by the new tax powers could see the number reduce.

It said: "It could be argued that a tax cut might induce some increase in labour supply, which may mean that the policy ultimately costs somewhat less than this.

"However, the scale of the tax changes being proposed would suggest that the behavioural impact would be relatively small, so that the ultimate policy cost would only fall by £20 million or so from the £270 million static cost."

According to the institute, the reason the figure "appears surprisingly expensive" is because it will also be felt by those who earn more than £45,000 a year.

Mr Carlaw had said: "I want to prioritise helping middle earners and start closing the tax gap with their friends in the rest of the UK.

"Tax cuts for those on high incomes are not my priority.

"In time and over the longer term, we will look at the whole tax system in Scotland and how it can better support growth and prosperity."

Mr Carlaw is set to take on fellow MSP Michelle Ballantyne in the leadership contest, with nominations due to close on Friday.

Both have pledged to bring "blue collar conservatism" to the leadership of the party, which has been without a permanent figurehead since Ruth Davidson stood down in August.

Mr Carlaw is currently seen as the front-runner for the position, boasting support from a majority of MSPs, all of the party's council leaders in Scotland and some MPs.

But the interim leader told the PA news agency he "takes nothing for granted" when it comes to the leadership race.