SNP faces Budget battle for support over tax squeeze
SNP ministers are facing a battle to get their Budget approved – because opponents are preparing to block their tax plans.
The Scottish Conservatives have confirmed that they will not support Finance Secretary Derek Mackay’s Budget if it raises taxes above UK levels.
Ruth Davidson’s party has opted to make any proposal to raise taxes higher than the rest of the UK a ‘red line’ when the party decides whether to back the SNP’s proposals next week.
The Scottish Greens, who support the SNP on independence, have decided to oppose the Budget if it does not raise taxes on higher earners.
With the SNP a minority government at Holyrood, the challenge from the Left and Right could scupper its tax plans.
The SNP plans to raise the threshold for the higher 40p rate of income tax from £43,000 to £43,430 from April – but the threshold will rise to £45,000 in the rest of the UK, meaning Scotland will become the highest taxed.
Ahead of Mr Mackay presenting his Budget at Holyrood next week, a Scottish Tory source said: ‘It is absolutely essential that taxes don’t rise higher than the rest of the UK, not by a morsel. We can’t support a Budget that increases tax beyond the UK rates.
‘Scotland being the highest taxed part of the UK would damage the economy and make Scotland a less attractive place to do business.’
Labour has previously voted against the SNP’s tax plans because it supports a 1 per cent income tax rise across the bands. It also emerged yesterday that the Scottish Greens will demand the SNP raises taxes on ‘wealthier’ Scots, or they will oppose the Budget.
It had previously been assumed that it would go through with their support.
The Scottish Greens said that introducing a ‘more progressive’ tax regime will be a negotiating ‘red line’ for Patrick Harvie’s party when it weighs up whether to support the SNP’s financial plans.
A Scottish Greens source was reported as saying: ‘We now have control over income tax rates and thresholds so we can give people on lower incomes tax cuts to make it easier for them, while asking those who are earning lots of money to chip in a bit more.
‘It will be up to ministers to say what they are willing to do to protect public services and help those on low incomes, but our party’s position is that a Scottish Budget that doesn’t use the new tax powers in a progressive way would be hard to support.’
Asked whether the tax rises for the better-off could be seized on by the Tories in a new anti-independence campaign, the source replied: ‘During the campaign ahead of the 2014 vote one of the arguments for a Yes was the need to shape a
‘Would damage the economy’ ‘Help those on low incomes’
fairer economy and a more progressive tax system in Scotland.
‘Now we do have control over income tax, so why don’t we use it?’
It has been speculated the Lib Dems could opt to support the SNP’s Budget if it secures significant concessions.
But the SNP Government’s plans to cut air passenger duty could be another stumbling block over reaching agreement with the Scottish Greens.
Ministers want to reduce it by 50 per cent from April 2018 and eventually abolish the tax.