The SNP /Green Government is considering higher income tax rates for Scots earning over £43,663 in a bid to shore up public services. Ministers are looking at whether to put up the 41p and 46p rates in next week’s Budget.
Acting Finance Secretary John Swinney is facing one of the toughest budgets of the devolution era due to inflation and having to fund public sector pay deals. Senior figures in the Government are looking at how to raise extra cash through devolved taxes.
Under the current system, Scots pay a 41 per cent “higher” rate on income between £43,663 to £150,000. It is understood there are around 478,000 taxpayers north of the border paying it. A top rate of 46p applies to income over £150,000.
It is understood the Government is examining an increase in both rates, with an insider saying that raising the 41p rate would generate “serious” money. According to research by the IPPR think tank, every half percentage point increase on the higher and top rates of income tax would raise an extra £100 million.
They also estimated that the same sum would be raised if the top rate rose by 2 percentage points. In its own Budget, the UK Government lowered the threshold at which wealthier people pay the top rate in England from £150,000 to £125,140.
The Scottish Government is believed to back this change in principle. At a rally outside Holyrood yesterday, STUC General Secretary Roz Foyer said Ministers would let down ordinary workers if they ignored tax reform in the Budget.
Foyer said to the Record: “It’s encouraging to hear the Scottish Government look set to meaningfully exercise their income tax powers and are perhaps taking heed from the STUC’s ‘Fairer Taxes’ report launched this week.
“We have called for higher earners to pay their fair share and ensure wealth is redistributed from those at the top to those most in need. Whilst the final outcome remains to be seen – and we will be pushing the Scottish Government all the way until budget day - Scotland’s workers cannot afford half-hearted measures.
“This is a cost-of-living emergency that requires an emergency response from John Swinney. No stone can be left unturned whilst workers across the country suffer entirely avoidable hardship and poverty.”
Hundreds of workers from a raft of trade unions, including the Scottish Secondary Teachers Association (SSTA) and NASUWT who are currently on their second day of strike action, rallied outside the Scottish Parliament ahead of the budget.
A Scottish Government spokesperson said: “The Scottish Government has already delivered the fairest and most progressive tax system in the UK while raising extra revenue to invest in public services and Scotland’s economy. Proposals on tax policy for 2023-24 will be published as part of the Scottish Budget on 15 December.”
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