Scotland’s £600m lost tax windfall from high earners

● Economic slump takes its toll ● More high earners Uk-wide

Scotland is missing out on a £600 million tax windfall as the current economic slump leaves the country with fewer workers than the UK average paying higher tax rates.

The Tories are now calling on ministers to abandon plans to make Scotland the highest taxed part of the UK and instead boost growth to increase the number high earners.

The slump in the North Sea oil and gas industry has seen Scotland’s economy fall behind the rest of the UK in recent years.

In Scotland 13.9 per cent of workers pay the higher rate of tax at 40 per cent which starts at salaries of about £43,000, while 0.7 per cent pay the additional rate of 45 per cent for those earning over £150,000. This compares with 14.7 per cent and 1.1 per cent UK wide. If Scotland matched the UK level there would be 20,320 more higher rate taxpayers and 10,160 more additional rate taxpayers – raising the tax take by about £600m a year.

Tory leader Ruth Davidson said: “Instead of pushing the case for growth, the SNP is cooking up a dangerous cocktail of high taxes and political uncertainty over a second referendum on independence.

“That is damaging jobs – and it will be local schools and hospitals that will suffer if they don’t change course. Scotland is now entering a new era and we need to move on from the arguments of the past.

“From this year, it is taxes raised in Scotland that will directly pay for our vital public services.”

The Scottish Government has refused to impose an extension of the higher rate to about £45,000 – an effective tax hike for those missing out in Scotland – which is being introduced elsewhere in the UK. But this will raise an additional £79m in revenues for the Scottish Government. A spokeswoman for finance secretary Derek Mackay said ministers are determined to “protect public services” and invest in economic growth.

“The real threat to tax revenues and household incomes is a hard Brexit which independent economists say could see wages fall by around £2000 per person, reducing the funding available for Scotland’s public services,” the spokeswoman added.

“Instead of obsessing over tax cuts for the rich at a time when public services are under pressure the best thing the Tories could do to support Scotland’s economy is to back the Scottish Government, stand up to Theresa May and support Scotland and the UK remaining in the single market.”