Robin Hood of Holyrood

Finance Secretary gives Scots earning less than £26,000 a Budget boost ..and makes higher earners pay for it

SCOTS earning less than £26,000 were given a Budget boost yesterday – with the better off footing the bill.

Finance Secretary Derek Mackay unveiled a progressive and politically astute series of changes to income tax in Scotland’s most dramatic Budget since devolution.

The shake-up – made possible by the pre-referendum Vow of more powers for Holyrood – will include a new tax band of 21p for all those earning more than £24,000.

Meanwhile, the higher rate of tax on bigger earners will be increased from 40p to 41p and the top rate – for those on more than £150,000 – will go up from 45p to 46p.

But a starter rate of 19p in the pound will also be introduced for those earning between £11,850 to £13,850.

Mackay delighted SNP backbenchers as he revealed the changes meant the 1.4million Scots earning less than £26,000 will pay less tax than if they lived elsewhere in the UK.

And none of the 1.8million Scots earning less than £33,000 will pay more tax than they do now.

Mackay insisted the changes – which he said would raise an additional £164million – had “enabled me to reverse the real terms cut the UK Government have imposed on our resource budget next year”.

He added that his measures would ensure ”Scotland is not just the fairest taxed part of the UK but, for the majority of taxpayers, the lowest taxed part of the UK”.

Nicola Sturgeon wrote on Twitter: “Progressive changes in tax are necessary to protect public services and invest in economy.

“However, seven in 10 taxpayers will pay less than now – and more than half of taxpayers in Scotland will pay slightly less than they do in the rest of UK.”

Tory finance spokesman Murdo Fraser branded the new basic rate the “Nat tax”.

He accused the SNP of breaking a 2016 manifesto promise not to increase the basic rate of income tax for those on low or middle incomes, and called on Mackay to apologise.

Fraser said the SNP had “put their hands in the pockets of hard-working Scottish families and businesses to bail them out of the mess they are making of the Scottish public finances”.

He added: “The message of this Budget is simply this – don’t be ambitious, don’t be hard working, don’t be successful in the SNP’s Scotland because we will penalise you for our failure to grow the Scottish economy.”

Scottish Labour leader Richard Leonard dismissed the changes as “trifling” and added: “It should be based on the principle of from each according to their means, to each according to their needs.

“A penny on the top rate just does not do it.”

Green co-convener Patrick Harvie – whose support will probably be required to get the Budget through Parliament – welcomed the tax changes.

He said: “The creation of new bands of income tax, cutting tax for low earners and raising it for higher earners, is a landmark moment for Scottish politics and shows Greens are playing a key part in delivering a fairer Scotland.

“Our proposals for a fairer system that raises more revenue have shaped the debate and those still talking about tweaks to the basic rate or freezing it, are being left behind.”

Mackay also outlined a three per cent pay rise for public sector workers earning less than £30,000, and a two per cent rise for those earning more than that.

The Finance Secretary began his Budget statement by claiming Scotland was facing the most challenging economic and fiscal environment for “any Budget in the devolution era”.

He also stressed the financial challenges that would arise from both Brexit and the declining number of Scots of working age.

To address this, he said, the Scottish Government would “continue to make the case for a common sense solution to Brexit that keeps Scotland and the UK in the single market and customs union”.