YOU'RE STILL NOT PAYING ENOUGH TAX
SNP’s grim message to hard-working Scots families:
HARD-working Scots families are facing the threat of more tax rises, the SNP warned yesterday.
Derek Mackay confirmed that he will not match the Chancellor’s planned income tax break in England, where the threshold for the higher rate will rise to £50,000 next year.
The Finance Secretary, who has described the affected middle-earners as among ‘the richest’ in the country, also gave the clearest indication yet that tax rates can rise further.
Scotland is the highest-taxed part of the UK following decisions made by Mr Mackay earlier this year, with everyone earning over £26,000 already paying more than those on similar incomes south of the Border.
And the gap will grow even larger next year. Philip Hammond has announced that the threshold for the higher 40 per cent rate will rise from £46,350 to £50,000 in April.
Currently, everyone earning more than £43,430 in Scotland pays the higher rate, set at 41 per cent by the SNP Government. Mr Mackay rejected claims that more tax rises
would lead to a reduction in the number of higher earners in Scotland, saying he ‘senses’ that the country is a long way short of that position.
But critics last night said he was not listening to experts who fear the damage different tax rates could do to the economy.
Scottish Conservative finance spokesman Murdo Fraser said: ‘This is a clear hint from Derek Mackay that he’s considering even higher taxes for Scotland. We’ve already heard from numerous businesses warning against this, pointing out the damage a tax differential would do to Scotland’s economy.
‘The SNP Government has also been told about the damage to public sector recruitment which could be caused by further tax hikes. But these remarks by the Finance Secretary confirm he simply isn’t listening to these experts on this vital matter.’
Mr Mackay confirmed in an interview with the Financial Times, published yesterday, that in his budget next week, he would not follow Mr Hammond’s lead.
He said: ‘I want Scotland to have a competitive tax regime and I will always follow the evidence to understand the tolerable levels of divergence. However, I do not think that now is the time to pass on tax cuts to the richest.’
He said he was committed to progressive taxation but insisted that he would never raise taxes if that risked bringing in less revenue. Asked if he felt Scotland was some way from this, he said: ‘That is my sense.’ The comment gives a clear signal the Finance Secretary believes that taxes can rise further without causing a reduction in the number of higher earners living in Scotland.
The SNP has said that it will only increase the higher rate threshold by a ‘maximum of inflation’ during this parliament. If only an inflationary increase is applied to the higher rate threshold next week, people earning £50,000 a year will pay £1,343 more in Scotland than the rest of the UK, rising to £1,643 for those on salaries of £80,000 and £1,843 for those earning £100,000.
Business leaders in Scotland have already pleaded with minis- ters not to widen the tax gap because of the possible impact on jobs and investment.
In yesterday’s Scottish Daily Mail, the Confederation of British Industry (CBI), which represents 190,000 businesses employing seven million staff across the UK, said widening the tax gap will damage the economy, hamper investment and strangle consumer spending.
CBI Scotland director Tracy Black said: ‘Income tax could become a major issue for companies keen to attract the best talent.
‘Following the UK Budget, Scottish firms will rightly be concerned about their ability to compete with rivals across the UK in the event of further divergence.
‘Supporting the private sector to deliver growth, jobs and prosperity is the best option to boost the country’s coffers and ensure public spending is sustainable.
‘One-off tax raids may look appealing, but there’s only so many times you can raid the cookie jar.’
Yesterday, a CBI Scotland spokesman said: ‘We would like to see no further divergence from that which exists already.’
David Lonsdale, director of the Scottish Retail Consortium, said: ‘Household finances are under strain and will be tested further next spring with rises in both council tax and the legal minimum we put into our pensions.
‘MSPs ought to be wary about heaping further pressure on to consumers.’
‘He simply isn’t listening’