The pickpockets are back for more
SNP and Greens strike deal for £55m tax raid
MIDDLE-CLASS families were hit by a new £55million tax bombshell yesterday as SNP ministers were accused of ‘penalising aspiration’. Finance Secretary Derek Mackay announced he will raise income tax by even more than first planned – to secure the support of the Greens for his Budget.
He was forced to find an extra £170million for councils and hand public sector workers earning up to £36,500 a 3 per cent pay rise.
But this came at a cost to higherrate taxpayers, with nearly 400,000 Scots now set to see their income tax rise by even more than first proposed.
Last night, there was a backlash from business leaders, while Scottish conservative finance spokesman Murdo Fraser said only a government ‘as arrogant’ as the SNP would ‘pick people’s pockets and then come back for more’.
At Westminster, the minister standing in for Theresa May at Prime Minister’s Questions demolished the SNP’s approach to the economy
cabinet Office Minister David Lidington told the commons: ‘We devolved new powers from this House to Holyrood, and it is obviously for the Scottish Government to determine how to use them. It is a matter of great regret, however, that they have chosen to use those powers to break their promises and penalise aspiration in Scotland.
‘In our Budget, we increased the Scottish Government’s spending power by £2billion, so the SNP has no excuse for hiking the taxes of hard Scottish working people, including public servants, and penalising businesses.
‘The leader of the SNP in Westminster used to champion wealth creation and free enterprise. I hope he will ask the First Minister to think again.’
In December’s Budget, the SNP had already announced proposals to break a 2016 manifesto commitment by increasing taxes for some basic rate taxpayers.
Ahead of the first vote on its Budget Bill at Holyrood yesterday, the SNP amended its proposals to secure the support of the Greens by providing extra cash for public services.
The move was partially funded by lowering the threshold for the higher rate of income tax from £44,273, as originally proposed, to £43,430, bringing in an extra £55million.
The change will mean nearly 400,000 Scots will pay up to £169 more than they would have before the changes.
An additional £170million was awarded to councils, which had been facing a £157million cut under the original proposals.
Public sector workers earning up to £36,500 are in line for a 3 per cent pay rise, with those on higher salaries set to get 2 per cent extra.
The revised Budget proposals were approved by 69 votes to 56 at Holyrood. A final vote by MSPs will take place next month.
Liz cameron, chief executive of the chambers of commerce (Scc), said: ‘We have repeatedly warned of the unintended effects of increasing taxation in Scotland out of step with the rest of the UK.
‘Although Scc welcomes progress on the budget process, this should not come at the expense of making Scotland a less attractive part of the UK for skilled employees to locate and work, or for businesses to recruit and invest.’
Scottish conservative MSP Adam Tomkins said that Scotland has been ‘stuck in a Nationalist cycle of chronically weak growth’ under the SNP.
Announcing the tax changes yesterday, Mr Mackay said: ‘Under my proposal to introduce new starter and intermediate rates and to increase the personal allowance, no one who earns less than £33,000 will pay more than they did last year. More than half of taxpayers will pay less than if they lived in the rest of the UK.
‘Those changes, combined with an increase in the higher rate threshold and changes to the personal allowance, created an anomaly by which a small number of higher rate taxpayers would have seen their bills reduce. I can confirm today that I will act to remove that anomaly.
‘Rather than pursue my initial proposal, I will instead increase the higher rate threshold by 1 per cent to £43,430. That will raise around £55million over and above the draft Budget proposal, with final costings to be determined by the Scottish Fiscal commission.
‘Overall, our tax decisions will deliver an additional £420million to protect the NHS, to invest in Scotland’s public services and to support our economy.’
Scottish Greens co-convener Patrick Harvie said that his party was working to ‘make Scotland fairer’.
But, responding to Mr Mackay’s statement, Mr Fraser said: ‘The ever- faithful Patrick Harvie has once again saved the SNP’s bacon; the always willing Scottish Greens are there to do their masters’ bidding.
‘The price for that, of course, will be paid by hard-working Scottish taxpayers – not the high earners, but families that are struggling to get by, with Mr Mackay’s hand in one pocket and Patrick Harvie’s in the other.’
Under the tax plans, a new 19p rate will apply to those earning £11,850£13,850, rising to the 20p basic rate on earnings up to £24,000, then a 21p intermediate rate up to £43,430. A higher rate 41p will be charged on earnings of between £43,430 and £150,000, rising to 46p above £150,000.
Around 1.1million Scots earning more than £26,000 will pay more than those earning the same as them in other parts of the UK.
‘Chronically weak growth’ ‘Greens saved the SNP’s bacon’