Nats refuse to rule out tax hikes after Brexit

NICOLA Sturgeon has refused to rule out income tax hikes in the wake of last week’s Brexit vote.

The First Minister said nothing ‘is on or off the table’ as the government comes to terms with the financial shock of leaving the EU.

The new convener of Holyrood’s finance committee, Nationalist MSP Mike Russell, also warned yesterday that Scotland’s budget will be subject to ‘much greater volatility’.

But a spokesman for Miss Sturgeon insisted she was only speaking in ‘general terms’ and ‘the manifesto is the manifesto’.

From April next year, Holyrood will have full control of all income tax powers as part of a deal on further devolution.

Speaking in parliament yesterday, Lib Dem leader Willie Rennie asked Miss Sturgeon: ‘The First Minister knows that I already have concerns about the funding for colleges, schools and nurseries.

‘That situation could get worse with Brexit. Will she consider a greater use of income tax powers to mitigate the effects of Brexit on our education system?’

Miss Sturgeon replied: ‘On the wider financial and economic issues, if anybody doubts the irresponsibility of what the Conservatives have done to this country, they need only read the Economist Intelligence Unit report that was published yesterday, which laid bare the economic consequences of the position that we are now in.

‘Clearly, that has consequences for Scotland. We do not yet know fully what those consequences will be, so, as part of our preparations for dealing with those consequences, we need to ensure that we are taking the time and care to look at all elements of our budgetary planning.

‘I am not saying that anything is on or off the table right now, but that is another aspect of the very careful work that we will have to do in the months ahead.’

But quizzed on the issue by journalists, her spokesman said later: ‘The whole of Western Europe is in upheaval and you are suddenly asking for specific details of what’s going to happen to tax policy five years down the road.’

He added: ‘I’m saying the manifesto is the manifesto and we’re sticking to the manifesto commitments.’

Before May’s election, Miss Sturgeon revealed that she will cancel George Osborne’s tax giveaway for the squeezed middle by refusing to raise the wage threshold for the higher 40p rate from £43,000 to £45,000. She will only put the salary threshold up to £43,387 next April.

But she has also said that she will not put the top rate up from 45p to 50p in 2017, which is levied on salaries of £150,000 or more, a move called for by both Labour and the Lib Dems.

A ‘tripartite review’ of Holyrood’s budget process was launched yesterday, involving the finance committee, the Scottish Government and external financial experts. Over the summer, parliament officials have been tasked with bringing forward proposals for a ‘fundamental review’ that will ensure MSPs have access to ‘adequate and timely information on tax forecasting and other key economic data’.

Committee convener Mr Russell said: ‘One of the main consequences of the new powers is that the Scottish Government’s budget is now potentially subject to much greater uncertainty and volatility.

‘For the first time under devolution, there will be heavy reliance on tax forecasting in the budget process. These forecasts are due to be prepared by the independent Scottish Fiscal Commission which will have a critical role in supporting the committee’s budget scrutiny.

‘It is also essential that the Parliament ensures there is now a balance between effective scrutiny of the new tax powers and the government’s spending decisions.’

‘Nothing is on or off the table right now’