SNP: Richest taxpayers will not pay more income tax under Scottish system


Party will only support progressive tax change across the whole UK – not independently

HIGHER INCOME TAXES for those earning over PS150,000 are only possible across the United Kingdom, according to First Minister Nicola Sturgeon.

Sturgeon announced a u-turn on previous party commitments to support an increased rate of tax for top earners – a tax increase policy that now only applies at Westminster and not for Holyrood.

The party’s MPs committed to a 50p top rate of tax, which Holyrood will gain the powers to create as part of the 2016 Scotland Act. However, the government has confirmed it will not change any income tax rates for low, high or top earners which are set at 20 per cent, 40 per cent and 45 per cent respectively.

The Scottish Government claimed that analysis found that returning to a 50p rate “could put millions of pounds of revenue at risk” due to tax competition with the rest of the UK.

SNP deputy leader Stewart Hosie previously stated: “Those with the very broadest shoulders should bear a slightly larger share of the burden” when justifying a 50p top rate of tax.

The SNP now believes it is only possible to carry out this policy across the UK – even when full income tax rate powers are devolved to Scotland from 2017/18.

The announcement on the 50p rate was welcomed by Scottish Tory MSP Murdo Fraser, who described the decision as a “sensible one & very welcome”.

Left-wing parties, the Scottish Greens and socialist coalition Rise, criticised the move as a failure to create a more progressive tax system.

Smith Commission: what is happening to income tax?

Rise, advocating a 60p top rate, said: “This is another depressing retreat from the first minister at a time when we need radical reform. The top rate of income tax applies to people earning over PS150,000 per year – that’s the richest one per cent of earners in Scotland.

“This group can afford to pay more, but the Scottish Government has decided to maintain the tax give-away they received from George Osborne in 2012.

“The First Minister cites the prospect of tax flight as the reason for her decision. But this is precisely the logic Tory ministers use to justify ever lower tax rates for the rich.”

Green co-convener Patrick Harvie MSP said: “Following on from the SNP’s deeply disappointing decision to let the unfair Council Tax live on in the next parliament, today’s announcement that nobody, not even the very wealthiest, will pay a penny more in income tax is breathtaking.”

The Green Party will announce its own income tax plans next week.

Scottish Nationalists argue that the proposal to maintain UK rates of income tax is a “balanced approach”.

First Minister Nicola Sturgeon added: “In setting out our proposals we have balanced the need to invest in and support our public services with a recognition that many households are still facing difficult economic challenges, and with the need to grow the Scottish economy.

“We will not allow our public services to pay the price of an inflation busting tax increase for the highest earning 10% of the population. We think that is the wrong choice and today we set out our alternative.

“No taxpayer will see their bill increase as a result of these Scottish Government proposals,” she said.

While the SNP in Scotland are now opposed to higher taxes on those earning over PS150,000 a year, income tax in Scotland will be higher for those earning over PS42,385 than in the rest of the UK.

The government confirmed that George Osborne’s planned tax cut for high earners – by decreasing the tax band qualification for the 40p rate – will not be replicated in Scotland.

Scotland has around 20,000 additional rate tax payers – who are currently taxed at 45 per cent of their income above PS150,000.

Since the election of a Tory government under Margaret Thatcher in 1979, deep tax cuts were enforced during an era of mass unemployment, privatisation and a growth of inequality.

One in five children in Scotland are growing up in poverty, according to the latest Child Poverty Action Group report. Food poverty has soared in recent years through a combination of low wages, a poor labour market and cuts to services and social security support.

Historically, the top rate of income tax has been as high as 99.25 per cent during the second world war. It stuck at 97.5 per cent after the war and was 98 per cent for top earnings from 1974 to 1979.

Since the election of a Tory government under Margaret Thatcher in 1979, deep tax cuts were enforced during an era of mass unemployment, privatisation and a growth of inequality.

Council tax and non-domestic rates have long been devolved to Scotland. Aggregates levy and the Land Buildings Transaction Tax (LBTT) were devolved in the 2012 Scotland Act. Over the next parliament air passenger duty, crown estate revenue and income tax rates and bands will be also be devolved.

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Picture courtesy of Public Citizen