No end to pain for ‘squeezed middle’
Left targets Scots families in new tax onslaught
TENS of thousands of Scots have been dragged into a punishing higher tax band following a relentless attack on the ‘ squeezed middle’.
Official figures obtained by the Scottish Daily Mail have revealed an astonishing 60 per cent rise in the number of workers paying the 40p level of income tax in the last parliament.
The so-called ‘fiscal drag’ has been lucrative for the Treasury, capturing workers who received pay rises because the threshold at which the higher rate kicks in did not rise with inflation.
As a result, rather than being a tax on the wealthy, it has become a tax paid by ordinary Scots – from teachers to police officers, middle managers to train drivers, and estate agents to IT workers.
Following fierce criticism from his own MPs, Chancellor George Osborne has finally vowed to raise the 40p threshold from £42,385 to £43,000 in 2016-17, £43,600 in 2017-18, and £50,000 by the end of the decade.
But middle-class Scots may continue to be punished when sweeping new tax powers are devolved to Holyrood next year. Labour wants to freeze the threshold at £43,600, while the SNP has urged ‘caution’ about Mr Osborne’s plan. Those on a salary of £50,000 would be £1,280 worse off than their English counterparts in 2020 if tax levels remain the same, and as much as £1,655 worse off under Labour’s controversial proposal to also increase the rate to 41p in the pound.
Eben Wilson of TaxpayerScotland, who called fiscal drag ‘a dirty little secret of an ever more intrusive government’, said: ‘This huge rise in higher rate capture in Scotland is deeply concerning. It is exactly what a small nation on the periphery of Europe does not need to rebuild its wealth and industry.
‘Having to pay a higher rate is a serious disincentive to aspiration and enterprise, especially among our brightest young graduates. Many may decide to leave Scotland and make their money elsewhere. That makes us all poorer.
‘Raising taxes on high earners in Scotland would be a mad policy. It is more than likely it would actually raise less revenue and crush growth.’
The HM Revenue & Customs figures show that Scotland has just over 2.5million taxpayers, with 372,000 paying the higher rate. That is a rise of 140,000 from 232,000 in 2010-11.
At the same time, the number paying the top rate of income tax levied on salaries of £150,000 or more, currently 45p, has risen from 11,000 to 17,000.
Scottish Tory finance spokesman Murdo Fraser said: ‘While George Osborne has been working hard to get our economy back on track and ease the pain of tax on middle earners, it is clear that the other parties i n Scotland want to punish hard-working people rather than ease the burden of tax on them.
‘It will also put Scotland at a competitive disadvantage in the UK and will simply mean wealth creators move South and we will all suffer as a result.’
The SNP is keeping its future tax plans under wraps, but when the Chancellor announced plans to raise the higher rate threshold to £50,000, SNP deputy leader Stewart Hosie said: ‘I urge caution on that, because it would be wrong to increase that threshold too fast while the same scale of welfare cuts are taking place.’
‘This would be a mad policy’