More tax pain ‘is on the way’

Experts warn bills may rise next year to protect public spending

SCOTS could be hit with more tax hikes next year, experts warn – amid fears that public services face cuts of up to £350million.

SNP tax increases will provide only brief relief from reductions in public spending, according to the Institute for Public Policy Research (IPPR).

The think-tank also claimed that ‘tough decisions’ must be made on expenditure.

It comes as the Scottish Conservatives publish figures identifying £209million in ‘efficiency savings’ they claim could be made this year instead of taxpayers being forced to bear the burden.

Finance Secretary Derek Mackay last week revealed that Scots earning more than £33,000 will see their pay packets cut, while those on over £26,000 a year will pay more income tax than their counterparts south of the Border.

He claimed the move, which will hit one in three Scots, is needed to provide vital funding, raising £164million.

Mr Mackay’s tax changes include the introduction of a new intermediate income tax band of 21p for those earning between £24,000 and £44,273.

The higher band for those on between £44,273 and £150,000 will rise to 41p. Earnings above this means a top rate of 46p.

But the IPPR yesterday warned that Mr Mackay will likely have to introduce even more tax increases next year to hold off public services cuts. The think-tank said SNP commitments to increase NHS spending and protect police budgets mean non-protected departments will face falls of £350million in 2019 – a cut of 2.7 per cent in one year.

Russell Gunson, director of IPPR Scotland, said: ‘As welcome as the tax rises are, our analysis shows that they will

‘Tackle inefficiency’

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.’

The Conservatives yesterday published a dossier outlining £209.3million in ‘efficiency savings’ in areas such as NHS agency staff spending, which could save £88.6million, unpaid court fines of around £4.6million and £1.3million spent on special advisers and communications staff.

Scottish Tory finance spokesman Murdo Fraser said: ‘Our spending analysis clearly shows where the Scottish Government can make substantial savings that could be ploughed back into public services – almost as much as can be raised by raising taxes on hardworking taxpayers.

‘Hitting families with higher taxes will only damage the Scottish economy in the longrun, leading to less money to fund public services.

‘The Scottish Government should instead seek to tackle areas of inefficient spending.’

Organisations including the Federation of Small Businesses, Scottish Chambers of Commerce and the Scottish Retail Consortium have all warned the SNP against raising taxes because of the negative effects on the economy, which is set to lag behind the UK for the next five years.

A spokesman for Mr Mackay said: ‘The Tory mask has slipped, and with this hit-list of cuts they are finally admitting that they would slash health spending – almost all of the £209million they identify would be stripped out of the NHS budget.

‘That is the reality of Tory tax policy – cuts for the health service and tax cuts for the wealthy.’