New tax system will raise £219m for Government

Conservatives claim cuts are minimal but Nationalists say it will deliver fairness

Holyrood has signed off a major overhaul of the tax system which will net the government an extra £219 million.

The majority of working Scots will pay £20 less than last year under the income tax changes, which come into effect in April.

However, 757,000 people – those who earn more than £33,000 – will see their take-home pay reduced.

Bill Bowman, for the Scottish Conservatives, said cutting tax by £20 for lower earners will do little to tackle poverty, while increases for those on higher wages will choke the economy.

“I invite Mr Mackay to visit Dundee’s more deprived areas to explain to hardpressed families how his tax cut, which won’t cover the cost of his return train fare, will help them out of poverty,” he said.

“Families across Scotland need real help, not gesture politics.

“These ill-conceived and unnecessary tax rises will affect the wider economy too, which is already suffering after a decade of SNP mismanagement and incompetence.”

The income tax reforms agreed yesterday by a Scottish Parliament majority of 67 to 50 will see the basic rate of 20p apply only to salaries up to £24,000.

A 21p intermediate rate will be owed on earnings between £24,001 and £43,430, when the 41p level will kick in, rising to 46p above £150,000.

A starter rate of 19p applies from £11,850 to £13,850, while those earning less than that threshold are exempt from income tax.

Derek Mackay, the Finance Secretary, said the changes are necessary in the wake of Conservative austerity.

“Our progressive approach to reforming income tax will deliver greater tax fairness and protect the lowest earning taxpayers in Scotland,” he added.

The income tax changes are the biggest in Scotland in the devolution era and mark the first significant shift away from UK policy for hundreds of years.

MSPS are set to pass the budget today after the Scottish Greens agreed to give the SNP the majority it needs.

Picture: Andrew Cowan. Finance Secretary Derek Mackay says the changes are vital to counter Tory austerity measures.