Tax boost ‘will only last year’
Think-tank say Mackay faces more tough decisions on how to fund public services
INCOME tax reforms proposed in the draft Scottish Budget will only provide relief from public spending cuts for a year, a think-tank have warned.
Analysis by the cross-party Institute for Public Policy Research Scotland showed the day-to-day spending budget is expected to fall by £250million between 2018-19 and 2019-20.
However, with commitments to increase NHS spending and protect police budgets, other departments will see falls of £350million in 2019 – a 2.7 per cent cut.
Announcing the proposed income tax rise for people earning more than £33,000 while delivering his draft Budget last week, Finance Secretary Derek Mackay said it would prevent spending cuts for most departments.
But IPPR Scotland director Russell Gunson said: “As welcome as the tax rises are, our analysis shows that they will only be sufficient to soften cuts for one year. Serious cuts to public spending remain just around the corner.
“Without further tax increases the year after next, or a stronger economy, deep public spending cuts in Scotland will restart in 2019.
“We are not yet clear as to what the Scottish Government’s tax and spending plans are beyond this year. However, with cuts that could reach £350million for nonprotected departments, over just one year, there will be further tough decisions that will need to be taken this time next year.”
Mackay said: “Over a 10-year period, Scotland’s block grant will have been cut by £2.6billion in real terms.
“In order to mitigate those UK cuts, protect our NHS and other public services, and to support our economy, we have reformed income tax in Scotland.
“We will continue to do all we can to protect Scotland from UK austerity.”