SNP BAILED OUT OF £1 BILLION TAX BLACK HOLE

Treasury steps in after revenues fall – despite Nationalist tax hikes

SNP ministers will be handed a massive bailout from the Treasury to help fill a £1billion black hole in tax revenue.

Official figures yesterday revealed overall tax revenue fell £941million short of forecasts. The shortfall came in the first year Scotland has been the highest taxed part of the UK because of SNP policies.

Treasury chiefs will provide the Scottish Government with an extra £737million in next year’s block grant to help fill the gap.

But the SNP Government will still need to find the remaining £204million – which could mean even more tax rises or cuts to public spending in next year’s Budget.

Writing in today’s Scottish Daily Mail, Liz Truss, Chief Secretary to the Treasury, says the bailout is being provided because ‘we’re one United Kingdom that stands together’.

She also attacks the SNP Government for damaging the economy by ‘choking growth with red tape and allowing the education system to crumble’.

Miss Truss adds: ‘While we’re focused on unleashing economic potential and attracting the best and brightest to start businesses, Nationalists are dragging down success with

their obsession with banning and taxing.’ She goes on: ‘The SNP’s obsession with independence means Nationalists have taken their eye off the ball, and people in Scotland are paying the price.’

The slump in tax revenues is based on the amount of money collected in 2017/18, the first year the SNP forced every higher rate taxpayer to pay more in Scotland than the rest of the UK.

Even larger budget shortfalls are expected in the following two years, with the overall total likely to soar beyond £1billion.

Since substantial new tax powers were devolved to Holyrood in the aftermath of the 2014 independence referendum, MSPs are now responsible for raising more of the money they spend.

But as part of the devolution settlement, the UK Government agreed to a ‘risk-sharing mechafigures

‘More raids on pay packets’

nism’ which sees it partially cover shortfalls in tax revenue to protect Scots from the impact.

Treasury figures yesterday confirmed that revenue from devolved tax in Scotland in 2017/18 was £10.92billion – £941million lower than the original official forecast made in 2016.

The Treasury will provide an extra £737million in the block grant it hands to the Scottish Government next year to partially cover the impact – but SNP ministers will need to cover the remaining £204million.

Tory finance spokesman Murdo Fraser said: ‘This exposes the cost of having an under-performing SNP Government which is overseeing sluggish growth and poor productivity. Thanks to that incompetence, public services may have to be slashed to the tune of £200million, or Scottish taxpayers will face even more raids on their pay packets.

‘Delivering more powers to the Scottish parliament should have been a huge opportunity for ministers to boost our economic fortunes. But instead, the SNP has squandered them.

‘Fortunately, the benefits of being part of the UK mean that this underperformance by the SNP Government can be compensated for by Westminster.

‘Perhaps the SNP should acknowledge that and be thankful for the Union, instead of trying to tear Scotland out of it.’

In 2017/18, the Scottish Government froze the threshold for paying the higher rate of income tax at £43,000, despite it rising to £45,000 in the rest of the UK, opening up a tax gap between Scotland and England for the first time since the Act of Union.

Since then, the gap has widened much further, with everyone earning more than £27,000 now paying more north of the Border. The new show there was a 0.6 per cent decline in the number of taxpayers in Scotland between 2016/17 and 2017/18, compared to a 1.8 per cent rise across the UK.

Revenues from income tax increased by 1.8 per cent compared to the previous year in Scotland, while there was a 3 per cent rise in the rest of the UK. The

‘Lower taxes can stimulate growth’

number of higher rate taxpayers increased by 14,000 in Scotland in 2017/18, to 308,000, when the SNP froze the threshold at £43,000.

In contrast, there was a decline of 76,000, to 3.7million, in the rest of the UK at the same time as the threshold increased to £45,000.

John O’Connell, chief executive of the TaxPayers’ Alliance pressure group, said: ‘Often high levels of taxation can slow down economic growth and result in individuals and businesses relocating elsewhere.

‘Conversely, lower taxes can stimulate growth in the private sector, bringing in more money for the Government to spend on improving public services. The Scottish Government should consider lowering the tax burden and implementing pro-business policies to regenerate the economy.’

Separate Treasury figures published yesterday showed that Scots receive £1,531 more in public spending. Total public spending per head of population was £10,881 in Scotland compared with £9,350 across the UK.

Finance Secretary Derek Mackay said: ‘These statistics show that the Scottish Government’s choices on taxation are helping to create a more progressive tax system at the same time as our economy is growing with low unemployment.

‘Between 2016/17 and 2017/18, Scottish income tax revenue increased by £197million, a growth of 1.8 per cent, while the number of Scottish higher and additional rate taxpayers combined, and the revenue paid by them, grew more quickly in Scotland than in the rest of the UK.

‘These figures demonstrate that concerns taxpayers would relocate as a result of our tax policy choices were unfounded.’

He added: ‘Whilst these figures show our reserves and borrowing capacity are sufficient to manage the 2017/18 reconciliation, I will make a decision as part of the Budget and spending review process on how to manage any reconciliation in a fiscally responsible way that supports our vital public services.’