Fight erupts at Holyrood over tax raising powers as new data shows high earners haven’t been deterred in Scotland
TAX DATA from HMRC records has shown that the number of high earners has risen in Scotland despite Tory warnings that raising taxes would drive them away.
The figures, showing a jump of 7 per cent of high earners, also destroy the Tory idea that Scotland being “the most taxed part of the UK” means high earners will not want to stay or invest in Scotland’s public services through taxation.
This is despite the Scottish Government in its last budget keeping the higher 40p rate of tax at £43,000 meaning individuals at this tax bracket pay more than in the rest of the UK, where the Tories have cut tax for the richest.
Scottish Labour used the research to demand an introduction of higher taxers on the wealthy while the Scottish Tories maintained their position that there should be no raises in the amount of tax paid by high wage earners in Scotland.
“We can make different choices and build an economy that works for working-class people.” Kezia Dugdale
Kezia Dugdale, the Scottish Labour leader, said the figures represented a widening gulf between the “richest and the rest” and that increasing taxes on top earners would pay for improved public services and social policies such as topping up child benefit.
She said: “We can make different choices and build an economy that works for working-class people, protects public services and asks the richest to pay their fair share so we all benefit. The SNP’s refusal to tax the richest a little more means the poorest are being hit the hardest.”
But in a countering statement to CommonSpace a Scottish government spokesperson said: “Where we have the powers to do so, we are making taxation fairer and more proportionate to the ability to pay, while also raising additional revenue.”
According to HMRC, 0.8 per cent of taxpayers in Scotland earned over £150,000 and paid 19 per cent of tax in 2015. This was compared with the 2011 figure of 12.5 percent which was explained by the number of high earners rising from 13,000 to 20,000. The Scottish Conservatives were quick to point to what they called “poor rate of growth in the Scottish economy” following the recent news that the forecast growth for Scotland had been revised to 0.2 per cent compared to 1.8 per cent for the UK as a whole.
“Where we have the powers to do so, we are making taxation fairer and more proportionate to the ability to pay, while also raising additional revenue.” Scottish Government
Scottish Labour, which released the analysis based on HMRC figures, said the “ballooning” salaries of a group it described as the “super-rich” was evidence the SNP should tax them more.
The combined annual income of people earning over £150,000 a year has risen by 68 per cent to over £6.2 billion since the turn of the decade, with the figures reigniting the row over how Holyrood should use powers over income tax rates.
The Scottish Greens say there should be new rates and bands to give a tax cut to those on lower than average incomes and workers on higher wages should pay more tax.
At the 2015 general election, Ms Sturgeon backed the reintroduction of a 50p tax rate for those earning over £150,000, a policy introduced by Labour in 2010 but ditched after the Conservatives won power at Westminster. However, she abandoned the policy ahead of last year’s Holyrood election.
In the most recent budget, the Scottish government opted not to implement an increase in the threshold for paying the higher 40p rate of tax, keeping it at £43,000 while it rises to £45,000 in the rest of the UK.
Crucially, what the Scottish government will not be able to do is alter the rates of National Insurance and VAT, which are the two big sources of revenue, along with income tax. And one of the significant tax powers that is not included in this new batch of changes is Corporation Tax, levied on the profits of companies. Although Holyrood will have more control over income tax, it will not be able to set the personal allowance – basically the starting figure at which people pay tax.
Picture courtesy of Image Money
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