Rising bills could create a charter for tax avoidance SNP warned
INCREASING income tax may not bring in more money as avoidance measures could soar, MSPs have been warned ahead of a Holyrood debate on the subject.
Professor Richard Murphy, director of Tax Research UK, said it was ‘ridiculous’ that so many people were able to dodge tax by registering a company.
And he called for a Scottish companies registry that would help ensure that firms meet their obligations.
MSPs will today debate changes to income tax after the Scottish Government launched a cross-party discussion, prompting speculation that a rise may be on the horizon.
Scottish Labour will lead the discussion calling for the SNP to use tax powers available to help fund public services – including the NHS.
The Greens and Liberal Democrats will also back a rise in taxation.
However, the Tories last night warned the proposals could see 80 per cent of workers having to pay more tax.
Professor Murphy told Holyrood’s economy committee: ‘The question on income tax in Scotland is one of how effective a rate rise is going to be.
‘And the answer is it may well not be very effective because it is so easy for people to incorporate what otherwise looks like an employment, turn it into a company, it will (probably) have an employee, will then be paid a dividend to cover the rest of the remuneration and that will be subject to UK income tax rates, not Scottish income tax rates, and so tax avoidance will go on.
‘It is as simple and straightincome
‘A dangerous message’
forward as that. Scotland cannot enforce its own will with regard to its own income tax rate when it is so easy for income to leave the Scottish tax system.’
Scottish Labour interim leader Alex Rowley will lead today’s debate.
Yesterday he called on First Minister Nicola Sturgeon to back his motion for a rise in tax, claiming it would prevent further cuts to public services.
Mr Rowley said: ‘Labour believes in the principle of using the tax powers of Holyrood to stop the cuts and invest in public services. Parties will now have to pick a side and say what they believe in.
‘Eighteen months on from an election campaign which saw the SNP attack Labour for being honest with voters, it is finally time for a serious debate on tax.’
Meanwhile, Scottish Conservative finance spokesman Murdo Fraser said he does not believe families should be faced with a greater tax burden.
He added: ‘With increasing taxes for those paying above the basic rate there is a real risk that you end up with a lower tax take as a result.
‘It sends out a dangerous message which suggests that Scotland is not an attractive place to live, work and do business if we are the highesttaxed part of the UK.
‘We want competitive taxes in Scotland to help grow our economy, increase tax revenues and make Scotland the best place to be.’
Nationalist MSP Gillian Martin warned Labour that ‘taxation is not a competition or political game’.
Finance Secretary Derek Mackay said: ‘Where we have the powers to do so, we have made taxation fairer and more proportionate to the ability to pay, while also raising additional revenue.
‘The income tax rates and thresholds set by the Scottish parliament for 2017/18 protect lower income taxpayers – but also generate extra revenue of £107million this year to invest in public services.’