Nicola Sturgeon has accused the Conservatives of "utter ineptitude" after the UK Government announced it would no longer cut the top rate of income tax for millionaires.
The U-turn was made at 8am despite Liz Truss declaring yesterday she would not change her party's controversial economic policies.
The new prime minister and her chancellor Kwasi Kwarteng have faced a week of intense pressure after announcing a mini-budget which slashed taxes for the wealthy.
But Kwarteng announced early on Monday that the scrapping of the top rate of tax would not go ahead in the wake of market upheaval.
The pound dropped to its lowest level against the dollar after the mini-budget and the International Monetary Fund (IMF) and Bank of England intervened.
Income tax levels in Scotland are set by Holyrood and SNP ministers had been under pressure from Conservatives to replicate the cuts north of the Border.
Sturgeon said the Scottish Conservatives should now “be reflecting this morning”.
She tweeted: “UK Government U-turns on top tax rate abolition because it’s a ‘distraction’. Morally wrong and hugely costly for millions is a better description. Utter ineptitude.
"Perhaps those who slammed Scottish Government for not immediately following suit should also be reflecting this morning."
But speaking to the BBC in the hours after the tax cut was scrapped, Scottish Tory chairman Craig Hoy said the Scottish Government should pass on the cut to the basic rate of tax – which will still go ahead.
When asked if the Scottish Government should go ahead with the cut to the top rate of tax regardless of Monday’s climbdown, Hoy said that was “not an objective of the (UK) Government”.
"The question now for Nicola Sturgeon and the SNP is are they going to continue with a tax system in Scotland that is less competitive than the rest of the UK,” he said.
"They should be doing something on Land and Buildings Transaction Tax (LBTT) to make sure our housing market is as competitive as the rest of the UK.
"And they should be doing something on the (basic rate) of tax, because ultimately, 2.3 million Scots could benefit from a tax cut and that would lead to a huge boost in the economy.
"I look forward to Nicola Sturgeon explaining how she is going to put growth into the Scottish economy."
Hoy went on to say he did not think the Chancellor was “finished”, adding that both Prime Minister Liz Truss and Scottish Tory leader Douglas Ross would still be in post by Christmas.
Alison Thewliss, the SNP's economy spokeswoman at Westminster, said: "The Tory budget has been a disaster. It was inevitable this morally repugnant and hugely expensive policy would have to be reversed - after doing so much damage to people’s mortgages, pensions and the UK economy.
"People in Scotland will not forget that Liz Truss and Kwasi Kwarteng wanted to rob the poor to pay the rich - and this U-turn will not distract from the fact they are still planning to impose a new wave of devastating Tory austerity cuts, which will hurt the poorest and threaten our NHS.
"Douglas Ross should be apologising for demanding that the Scottish Government replicate this damaging policy in Scotland. It’s no wonder Tory MSPs are plotting to have him removed as Scottish Tory Leader. It's completely inept."
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