HOLYROOD TAX RAID ON MIDDLE SCOTLAND

Families face highest bills in Britain as parties plan income tax rate hike

SCOTS families face being hit with the highest taxes in the UK as Left-wing parties unveil plans to use Holyrood’s new powers. Labour leader Kezia Dug dale will today

announce a flag ship policy to hike each band of income tax by 1p in Scotland.

This will increase the basic rate to 21p in the pound and the higher rate to 41p. The idea – which has echoes of the SNP’s doomed ‘penny for Scotland’ campaign in 1999 – matches a near- i dentical manifesto policy unveiled by the Lib Dems last week.

That will raise fears the SNP leadership could also lurch to the Left and further hammer middle-class families.

Nicola Sturgeon has repeatedly promised ‘progressive’ changes to taxation, with

reforms to stamp duty already forcing many home-buyers to pay more than their English counterparts – providing a telling foretaste of what could come.

The Nationalists also back the restoration of the 50p top rate of income tax, which they will be able to do when further devolution allows i ndividual bands t o be adjusted.

But a Scottish Government source last night branded Labour’s plans a ‘tax-grab’ on the poorest Scots, signalling that Miss Sturgeon’s proposals will largely be aimed at middle-income families.

Tax is set to be the major issue in May’s election, as MSPs now have huge control over pay packets for the first time – with more powers on the way.

Only the Tories have promised to ease the burden on workers through a tax cut.

Scottish Labour’s latest plan would raise around £500million, which party sources last night said would allow the Scottish Government to reverse sweeping cuts to local authority budgets and avoid large council tax rises.

But anyone earning more than £20,000 a year would be worse off, with those on £40,000 facing an increased tax bill of almost £300 and those on £60,000 paying an extra £490.

The party, which is struggling in the polls, also wants to further punish wealthier families by blocking George Osborne’s bid to raise the threshold for the higher rate of i ncome tax to £ 50,000 and by re-introducing the 50p top rate.

Labour will call for a 1p rise as soon as April – which is almost certain to be blocked by the SNP – and will make a manifesto commitment to the new rates for the lifetime of the next five - year parliament, which would result in rates of 21p, 41p and 50p, compared to 20p, 40p and 45p elsewhere in the UK.

In a sign of the panic sweeping through the party, it is thought the policy has only been produced in recent days. On Friday, Holyrood’s finance committee – which includes Labour frontbencher Jackie Baillie – publicly backed Finance Secretary John Swinney’s plan to match the UK’s i ncome tax rates in 2016-17.

But Miss Dugdale will say today: ‘Labour cannot support an SNP budget which asks our children and young people to bear the brunt of the cuts. Given the choice between using our powers or making cuts to our children’s future, we choose to use our powers.

‘We will tear up this SNP budget that simply manages Tory cuts and instead use the power we have to set the Scottish rate of income tax one pence higher than the rate set by George Osborne. This will pro- vide an extra half-a-billion pounds a year to invest in the future.

‘We don’t do this because we want to use the powers for their own sake. We do it because there is no other alternative to cutting into our nation’s future.’

Labour’s plan would see those who pay income tax yet earn less than £20,000 better off, as they would receive a £100-a-year payment as part of the scheme.

The Lib Dems’ alternative proposal does not include the boost for the poorest workers.

Last night, Scottish Lib Dem leader Willie Rennie said: ‘ I’m pleased the consensus is growing that action is required for our public services.’

But Scottish Tory finance spokesman Murdo Fraser said: ‘We believe the rate of income tax should not be higher in Scotland than the rest of the UK. Ideally, when it’s affordable, it should be lower. It’s clear other parties in Scotland want to punish hardworking people rather than ease the burden of tax on them.’

A Scottish Government source said: ‘Around 2.2million basic rate taxpayers across Scotland, including almost half a million pensioners, would be hit by Labour’s tax grab.

‘Around 40 per cent of the adult Scottish population don’t earn enough to pay any income tax, and the lowest-paid would actually lose out because anyone earning less than £11,000 – mostly women in part-time work – can still pay National Insurance but would not benefit from the proposed £100 rebate.

‘The SNP Government is committed to fair and progressive taxation, and that principle will be at the heart of our plans for a third term in office.’

‘We want to tear up

this SNP budget’