Changes modest .. but so symbolic
Stirling Management School THIS Budget was the most important since devolution. Previous Scottish finance secretaries only had to think about how to spend money.
Derek Mackay had to look at both sides of the balance sheet – income as well as spending. This was the outcome of the Smith Commission which proposed that Scotland be given substantial new tax- raising powers.
The most important, income tax, will come fully into effect next financial year. It is worth around £12billion to the Scottish Government, not quite enough to pay for our health service, but a tidy sum nevertheless.
If Mackay can get a majority at Holyrood, proposals for income tax rates and bands will be in place for April 2018.
The proposals he announced yesterday will make the Scottish income tax system slightly more “progressive” than in the rest of the UK.
Low-income taxpayers will pay slightly less and high earners will pay more.
He is introducing a new tax band for incomes between £11,850 and £13,850 where the tax rate will be 19p rather than 20p, as it is in the rest of the UK.
So someone earning £13,850 in Scotland will pay £20 less income tax – not a big change. But someone earning £100,000 will pay more than £1000 extra income tax each year compared with England because they will pay higher rates on all income above £24,001.
Overall, the changes to income tax are quite modest.
The newly formed Scottish Fiscal Commission estimate that they will raise £164million – less than 1.5 per cent of total income tax revenue.
But it is a hugely symbolic change intended to show that the Scottish Government are willing to extract some pain from the better off to protect public services.
Derek Mackay’s Budget was the biggest since devo - it had to look at income too DAVID BELL