Swinney’s budget will hit middle Scotland ... AGAIN
Thousands face income tax increase as SNP set for new raid on earnings
SCOTLAND’S middle classes look set to be hammered by punishing tax hikes when the SNP Budget is unveiled later this week.
John Swinney has now issued the clearest signal yet that he plans to raid the pay packets of hard-working families to fund his spending plans. In a statement ahead of Thursday’s Budget announcement, the Deputy First Minister warned he faces ‘difficult decisions’ around fiscal policy.
He also spoke of his desire to create a ‘fairer’ Scotland – echoing the rhetoric the Nationalists have previously used when introducing tax rises for higher earners.
Last week SNP sources reported ministers were ‘seriously considering’ raising tax rates. The Scottish Government has already slashed £1.2 billion of public spending to fund pay increases for state employees.
But Mr Swinney has now insisted even more money must be found for higher welfare payments. It raises the prospect of Scotland’s squeezed middle once again bearing the brunt of bruising tax hikes.
Scotland is already the most heavily taxed part of the UK with anyone earning more than £28,000 here contributing more in PAYE than they would do in England or Wales.
Now there are suggestions those with a salary of more than £43,000 will be singled out for even more income tax punishment in the SNP’s financial plans for 2023/24.
Mr Swinney yesterday said: ‘Given the fiscal constraints of devolution, it is not possible to go as far as we would like and so the budget will prioritise three areas: eradicating child poverty; transforming the
‘No one doubts the tight financial circumstances’
economy to deliver net zero; and creating sustainable public services. Difficult decisions are required and resources will be targeted where they are most needed.’
The SNP chief – standing in for Finance Secretary Kate Forbes, who is on maternity leave – claimed the ‘longest recession in a century’ is looming, as he vowed to outline ‘reforms that will place our finances and public services on a more sustainable footing’.
He added: ‘This is a time for firm leadership to ensure Scotland emerges from the current crisis a stronger, fairer, greener country.’
Last night the Scottish Tories urged Mr Swinney not to increase the tax burden on hard-working Scots.
Finance spokesman Liz Smith said:
‘No one doubts the tight financial circumstances, but at a time when funding from the UK Government is at a record high, the SNP must finally take responsibility for their own spending choices.
‘Despite the SNP’s relentless complaint that the current situation is all Westminster’s fault, John Swinney knows full well the Auditor General identified an underspend last year of £2 billion while he imposed savage cuts to every government department – except the constitution.
‘John Swinney and the SNP must ensure there are no damaging tax differentials between Scotland and the rest of the UK.’ Earlier this week, a
Scottish Government source claimed raising income tax rates for middle and high earners would generate ‘serious’ amounts of extra revenue.
It is estimated Ministers will need to find an additional £750 million each year by 2026 to fund more generous welfare payments here, including the £25-a-week Scottish Child Payment.
The SNP has also sanctioned hefty public sector pay rises for rail and refuse workers as well as NHS staff, encouraging others to seek similar hikes, with teachers demanding a 10 per cent rise.
The higher rate of tax is already 41 per cent in Scotland, compared with 40 per cent south of the Border.
It kicks in earlier too, £43,663 rather than £50,271. The top rate is also 46 per cent, while it is 45 per cent in England. Mr Swinney is expected to match Chancellor Jeremy Hunt’s own recent mini-Budget by dropping the threshold when the highest rate of tax kicks in from £150,000 to £125,140.
Scots on £50,000-a-year pay nearly £1,500 more in tax and that gap is now set to grow wider still. A Scottish Government spokesman wouldn’t confirm or deny tax rises are imminent.
He said: ‘We have already delivered the fairest tax system in the UK. Proposals on tax policy for 2023-24 will be published as part of the Budget on December 15.’