The Courier & Advertiser (Perth and Perthshire Edition)
Warning more powers needed before tax hike
Think Tank warns Scottish Government against raising income tax
Scotland needs more powers to be devolved before income tax can be increased, a think tank has warned.
Reform Scotland has urged the Scottish Government to resist increasing income tax until it has control over additional levers such as VAT and corporation tax.
Finance Secretary Derek Mackay is widely expected to announce tax rises when he sets out his draft budget at Holyrood on Thursday in a bid to raise more cash for public services.
Nicola Sturgeon has already set out four alternative options which would see “modest” rate rises for higher earners, indicating that those on salaries of more than £31,000 could be affected.
The options include having anything up to six income tax bands, with three of the four featuring a 50p additional rate and incremental changes to the basic and higher rates.
The approaches could raise between £80 million and £290 million in additional revenue.
But Reform Scotland called for income tax to be pegged to the Westminster level until more powers are devolved, arguing that “coherent” reform is not possible while the Scottish Parliament still raises only around 40% of what it spends.
The organisation said there was a “disproportionate dependence” on income tax, which accounts for twothirds of all the tax raised by Holyrood.
Chairman Alan McFarlane said: “Altering the income tax rate to make it different from Westminster, far from being beneficial, could be detrimental to Scotland’s economic performance and lead to a drop in revenue available to spend on public services.
“The Scottish Government has itself acknowledged the potential for adverse behavioural change in response to income tax policies. We need more tax levers to equip us to introduce coherent reform.”
Meanwhile a Survation poll of 1,006 adults for the Sunday Post found that almost half (46%) backed a rise in income tax to raise money for public services, with 28% opposed and the remainder saying they either did not know or did not care.
But when asked what the Government should do first to provide extra cash for public services, 61% backed a spending review and 22% said income tax should be raised while the remainder said neither or didn’t know.