Scots’ tax rise could lose £288m
Scotland’s income tax hikes could end up costing the public purse up to £288 million if wealthy people chose to move to England.
Last week, the Scottish Government revealed plans to increase the higher rate of tax from 40p to 41p and the top rate from 45p to 46p.
The Scottish Fiscal Commission, an independent public body set up to monitor the economy, has examined the possible consequences.
The commission’s report states: “For the very highest income taxpayers, the commission assumes a greater behavioural response. This is because there is scope for some very high income individuals to relocate within the UK to avoid higher taxes in Scotland.”
They estimate that up to £288m worth of tax income could be lost as a result over five years.
Murdo Fraser, Scottish Conservative finance spokesman, said: “This report simply confirms that Finance Secretary Derek Mackay’s budget is unlikely to boost the tax take for government, which means less money for key public services like schools and hospitals.”
The Scottish Government said spending on measures to boost the economy will increase by 64% – or £270m – in 2018/19.
Mr Mackay said: “We have more than doubled our spending on economic growth, with spending per head now more than £100 higher in comparison to the UK Government.”