CLOBBERED BY TARTAN TAX DIVIDE
Middle earners punished as SNP Budget widens income tax gap
HUNDREDS of thousands of hard-working Scots are set to see their tax bill soar above those in other parts of the UK.
It comes after middle-income families were clobbered in the SnP’s Budget yesterday. all 367,000 workers who earn more than £43,430 will be hammered with substantially higher rates of income tax than people earning the same south of the Border.
Someone on a salary of £50,000 will pay £1,544 more income tax in Scotland than they would in England, rising to £1,794 for those on £75,000 and £2,044 for those on £100,000.
It will come at a cost to ordinary workers such as policemen, teachers, nurses and train drivers.
The move has sparked fears of a
brain drain, with Scots moving south to avoid the savage rates of tax – and fewer people from other parts of the UK relocating to Scotland.
On the same day as the raid on middle earners, MSPs handed themselves a 2.3 per cent pay rise.
In other developments following the Budget unveiled by Finance Secretary Derek Mackay yesterday:
People buying a second property will be hit by an extra 4 per cent ‘additional dwelling’ tax;
Ministers ignored demands from business to press ahead with their promised cut to a business supertax;
But they formally abolished plans to introduce a new tax on online and out-of-town businesses;
Economic forecasters warned of ‘subdued’ conditions for five years, though they upgraded predictions for growth next year despite fears about the impact of Brexit;
All public sector workers on salaries up to £36,500 will get a 3 per cent pay rise, falling to 2 per cent up to £80,000 and a maximum of £1,600 above that;
Council leaders warned they may have to slash jobs and services, despite ministers saying local authorities would benefit from a £210million increase;
A windfall from Westminster allowed a £500million realterms increase in NHS spending.
As well as freezing the higher tax rate, the threshold at which workers start to pay the starter and basic rates was increased with inflation.
All the existing tax bands remain unchanged following the overhaul earlier this year.
It means the 1.1million Scots earning more than £26,990 will pay more than they would in England.
Mr Mackay said he froze the higher rate threshold at £43,430 – at the same time as it rises to £50,000 in the rest of the UK – because ‘now is not the time to cut tax for the highest earners at the expense of our public services’.
It is estimated that freezing the higher rate threshold instead of increasing it in line with inflation, as widely expected, will cost Scots a combined £68million.
Scottish Tory finance spokesman Murdo Fraser said: ‘In advance of today’s Budget, every business group in Scotland had one key ask of the SNP: that was to ensure that the tax differential between here and the rest of the UK would not increase.
‘But the Nationalists have ignored those calls today, penalising hard-working families right across the country.
‘It seems the expert warnings that a growing divergence would make it harder to recruit talented people across both the private and public sector have been roundly ignored. That’s the price of living in the SNP’s Scotland.’
All 120,000 workers who earn £43,430-£50,000 will continue to pay the higher 12 per cent National Insurance rate; their combined income tax and National Insurance rate for this part of their income will be 53 per cent, compared to 32 per cent in the rest of the UK.
Jo Douglas, a financial planner at Brewin Dolphin Scotland, said: ‘The measures in the Scottish Government’s Budget underline the diverging tax regimes between Scotland and the rest of the UK.’
CBI Scotland director Tracy Black said: ‘With weak growth, demographics shrinking our workforce and Brexit continuing to cause uncertainty, the failure to close the growing income tax gap between Scotland and the rest of the UK puts added pressure on an economy already crying out for talent and investment.’
Mr Mackay said: ‘As a result of these decisions, we have been able to invest in essential public services, particularly the NHS, while ensuring 55 per cent of income tax payers in Scotland pay less tax than those earning the same income in the rest of the UK.
‘Taken together with the personal allowance, 99 per cent of taxpayers will pay less income tax next year on the same income.
‘The Scottish Government cannot completely protect Scotland from the recklessness of the UK Government, but the decisions we have taken ensure we protect what matters most. We are doing all this while the UK Government implodes on their journey of economic self-harm.’
He added that he may be required to ‘revisit’ the Budget if there is a no-deal Brexit.
‘Penalising hard working families’