Scots will pay even more tax, admits SNP
Mackay set to bring in ‘garden levy’ and admits the gulf with English bills will grow
THE tax gap between Scotland and the rest of the UK is set to grow, the Finance Secretary confirmed yesterday.
Derek Mackay gave a clear signal that he will again resist raising the threshold for middle-class earners who pay the higher 40p rate of income tax – unlike ministers south of the Border.
In his speech to the SNP conference in Glasgow, he said the Scottish Government’s stance was in ‘stark contrast’ to the Tories at Westminster, who will increase the threshold to £50,000 by 2020.
Mr Mackay also reaffirmed his commitment to exploring the introduction of a land value tax (LVT) – known as the ‘garden tax’ – to replace council tax, which could see some households forced to pay nearly £4,000 more than at present.
Last night there was growing speculation that Scottish ministers are considering substantial changes to taxation.
According to reports, they are looking at reviewing income tax bands and rates as a way to bring in more money for public services.
It is understood that this could see changes to the current bands or the creation of new ones.
The Government has signalled that income tax will rise in Scotland after some fiscal powers were devolved to Holyrood.
Ministers are consulting with opposition parties in an effort to create a more ‘progressive’ system – with Labour, the Liberal Democrats and Greens all calling for a rise in income tax. Only the Tories have opposed this.
Last night, the Conservatives condemned the SNP’s plans, insisting that any changes to income tax would be a ‘raid on the majority of Scotland’s workers’.
They have also accused Nationalists of ‘lurching to the Left’.
Scottish Labour economy spokesman Jackie Baillie urged the SNP to overhaul income tax, saying it ‘has the power’ to do so.
She added: ‘Derek MacKay has a cheek to stand on stage and talk about austerity from Westminster when his government has spent its time in office slashing local authority budgets.’
Although he avoided giving away too much detail on income tax yesterday, Mr Mackay did urge caution. He said: ‘Setting taxes isn’t easy. Taxation isn’t a toy – it has an impact on people’s lives and their choices, and as a government we take that responsibility very seriously.’
However, he went on to confirm that he will take the opposite stance from the Tories at Westminster over the higher 40p tax rate by keeping the current threshold of £43,000.
Last year the SNP refused to follow the lead of UK ministers, who raised the threshold to £45,000, making Scotland the highest-taxed part of the UK.
The gap means that those earning over the threshold north of the Border are paying around £400 more than their counterparts in England and Wales. And with the UK Government set to raise the threshold to £50,000 by 2020, the gap is set to grow even wider.
Mr Mackay said: ‘Our approach to tax stands in stark contrast to the Tory Government at Westminster. Where we choose progressivity, they choose tax cuts for the richest. The UK Government is hell-bent on a race to the bottom on tax and regulation, a race that Scotland doesn’t want to run.
‘We would rather a race to the top on public service, infrastructure and quality of life.’
He added: ‘Like we do with all taxes under our control, we will take a responsible approach to income tax.
‘Yes, we can set rates and bands, but Westminster remains responsible for the tax base, what is considered to be income, and how it is measured. It is also responsible for the personal allowance and for reliefs. Like in so many other areas, when it comes to income tax we have one hand tied behind our back.’
Mr Mackay also confirmed his commitment to changing council tax and replacing it with LVT.
He said: ‘We have commissioned the Scottish Land Commission to research the introduction of a land value tax.’
The Finance Secretary pledged to scrap the public sector pay cap in Scotland – regardless of UK Government plans – and said he had written to Philip Hammond urging him to do the same.
Mr Mackay added: ‘The majority of our Budget is still determined by decisions in London. That is why the UK Government must lift the cap across the UK, and fund the pay rise that people deserve. That is why today, along with the
‘On a race to the bottom’ ‘Raid on a majority of Scots workers’
general secretary of the STUC, I’ve written to the Chancellor, calling for him to do just that.
‘But let me repeat – come what may, we lift the pay cap.’
Mr Mackay’s speech came as members of the Public and Commercial Services Union (PCS) launched a UK-wide ballot over industrial action in protest against the public sector pay cap. Thousands of government staff could strike if staff do not get increases.
PCS national officer Lynn Henderson said: ‘Quite simply, our ballot calls for pay justice for public sector workers.
‘It is not unreasonable for workers to expect their wages to be inflation proof.’
Graham Grant – Page 14