Forbes warns ‘continually increasing taxes is counterproductive’

Kate Forbes has warned that “continually increasing” taxes is counter-productive because it ultimately reduces public revenue over the long term.

The former finance secretary made the comments after First Minister Humza Yousaf announced a tax rise for higher earners as part of the Scottish Budget in December.

A new income tax band is to be created for those earning more than £75,000, while the top rate will rise by 1p in the pound.

Ms forbes, who narrowly lost to Mr Yousaf in last year’s SNP leadership contest, has previously emphasised the importance of growing the tax base.

In new comments contained in a Highland newsletter, the MSP wrote: "Continually increasing taxes is ultimately counter-productive over the long term, even if you agree with it ideologically, because it ultimately reduces public revenue.

“The forecasts for what the Scottish Government will raise through its latest changes to the top tax bands is just over £80 million. That isn't to be sniffed at. But the forecasts also suggest that they'll lose £118m that they could have raised because of behavioural change – people leaving or reducing their hours or treating their income differently.

“That illustrates that we need to invest in people, in job creation, and in better wages. That way the tax take will increase.”

Ms Forbes added: “I’m constantly going on about the tax base. What I am really talking about is people. Calling for a bigger population, through inward migration and retaining our people, is exactly the same thing as wanting to see the tax base increase.”

The remarks echo others she made in December, when she told the BBC: “I think the key mission for Scotland has got to be investing in jobs and expanding the working age population in order to increase public revenue. That’s a far more successful route to increasing public revenue .”

Business leaders previously warned the introduction of a new tax band for higher earners “is a blow to Scotland’s attractiveness and places the personal tax system at a further competitive disadvantage compared to the rest of the UK”.