Sturgeon signals tax rise for workers earning over £24k

First Minister asks ‘ tough question’ but critics say plan scares off wealth creators

Nicola Sturgeon has signal led an income tax raid on Scots earning more than £24,000 under a series of proposals set out ahead of next month’s Scottish budget.

With the country facing austeri - ty, Brexit and an ageing population, Ms Sturgeon said it was time to ask “tough questions” about the amount of tax people pay.

The First Minister laid out four diff erent t ax i ncreasing scenarios as she promised to use new Holyrood powers to vary rates and create new bands to deliver a “proportionate and progressive” income tax system. The four proposals will form the basis of talks with the other political parties as the SNP minority administration seeks enough support to get a budget through the Scottish Parliament.

But her tax- raising plans triggered a backlash from business figures with the prominent Yes campaigner Peter de Vink dismissing them as “crass stupidity”.

Mr de Vink, an Edinburgh financier, warned that wealth creators would be driven from Scotland.

“Those paying the top rates of tax are very mobile and they will just shove off ,” Mr de V ink said .“The

problem is that Nicola Sturgeon is hostile to wealth creators whereas Alex [ Salmond] used to see wealth creators as manna from heaven. The worst thing is that the high taxpayers are the people who create the wealth and she will destroy that.”

All four scenarios would see those earning more than £ 150,000 pay more tax, with three of them advocating increasing the top rate from 45 per cent to 50 per cent.

But those earning much less would be hit. Three of the four scenarios would see an income tax rate rise for workers earning more than £ 24,000.

According to the Scottish Government document The Role of Income Tax in Scotland’ s Budget, launched by Ms Sturgeon and her finance secretary Derek Mac kay, nurses, primary school teachers, social workers would see an increased income tax bill.

But the Scottish Government said that factoring in an “assumed ”£350 increase in the tax- free personal allowance by the UK government would make £31,000 the crossover figure at which people began to pay more tax.

A £ 350 increase in the personal allowance between 2017- 18 and 2018- 19 would s ave a basic rate taxpayer £ 70.

Unveiling the plans, Ms Sturgeon said: “When the increase to the personal allowance is taken into account, none of these approaches would see anyone earning up to £ 31,000 pay a penny more than they do now.

“And in all four approaches, more than 70 per cent of all adults would continue to pay no tax at all or no more tax than they do today.”

One of the scenarios, which would see the number of tax bands increased from three to six, was described by Ms Sturgeon as potentially more progressive than the others.

Under that option, those earning up to £ 15,000 would see rates cut by a penny from 20 per cent to 19 per cent while those earning between £ 15,001 a nd £ 2 4,0 00 would pay t he current basic rate of 20 per cent and a new rate of 21 per cent would kick in for those earning between £24,001 and £44,290. Those earni ng from £ 44,291 to £ 75,000 would pay 41 percent, a penny increase, those earning between £75,001 to £150,000 would pay 42 per cent while those with salaries above £ 150,000 would be taxed at 50 per cent.

The Conservatives claimed proposing higher rates of income tax for basic rate taxpayers broke a SNP manifesto pledge. Scottish Tory leader Ruth Davidson said: “We don’t think it’s right that ever y Scot earning over £ 24,000 should have to pay more.”

Nicola Sturgeon’s decision to set out plans to raise taxes in Scotland is a bold move to break austerity – and a considerable political gamble.

For years, the public – joined with gusto by opposition politicians from all the parties – has complained about the state of health and social care, education and council services. In a sense, the First Minister’s announcement is putting us all on notice that she may call our bluff. How much do we want decent public services? How much are we actually prepared to pay for them?

Raising taxes is seldom a votewinning strategy. Few old- school spin doctors would recommend it.

Part of the problem is people usually feel the pain, before they notice any kind of gain. And if a hospital waiting list is reduced from six weeks to three – potentially a lifesaving improvement – individual people still have to wait and may not realise it was worse in the past.

If the decision is taken to intro - duce a new “progressive” income tax system, in which the poorest pay less, the richest pay more and total taxation increases, Sturgeon’s government will need to proceed care - fully. The key considerations will be ensuring the increased tax burden is shouldered by those who can gen- uinely afford it and that the extra money raised is spent effectively.

It is a welcome sign that the SNP is to hold talks with the opposition parties and one can only hope they enter into this process with the best interests of Scotland’s people fore - most in their mind. The temptation to play politics is likely to get the better of some.

For their part, the SNP must also take the views of opposition parties and, in particular, the business sector seriously.

This could be a pivotal moment for Scotland. Introduce a tax hike, spend the extra money unwisely and the SNP government is likely to fall. Hopes of independence any time soon would be dashed.

Subsequent governments would almost certainly be reluctant to go down the same path again; austerity could linger for years as our public services crumble.

But get it right and the future just might be brighter. The ramifications of a successful bout of tax- andspend could echo beyond Scotland, affecting elections to Westminster and even in the rest of Europe.

It is, without doubt, a risky move. It’s also one that could tell us a lot about ourselves and the kind of country that most of us want to live in.