HOLYROOD will today set Scotland’s rate of income tax for the first time in the Parliament’s 18-year history. The vote will likely see the SNP-Green compromise to freeze the top rate of tax at £43,000 squeeze through.
As a minority government in the Scottish Parliament, Finance Secretary Derek Mackay and the SNP needed the support of one of the other parties to pass their budget.
Plans to raise the 40p rate in line with inflation were scrapped during negotiations with the Greens. Labour, who argued for a 50p top rate of tax for the richest one per cent earning more than £150,000 a year, said the two pro-independence parties had given up any pretence of being progressives.
The Tories said the higher rate tax north of the Border made Scotland the highest taxed part of the UK.
The Greens said their pragmatic opposition had helped find an extra £160 million for local authority budgets.
Mackay said: “It’s an historic day in that for the first time the Scottish Parliament is using the new powers that we have to set tax, and of course we have the power to change the bands if we wish to do so.”
He added: “Some are saying we are raising too much, some are saying we are not raising enough – I think we’ve got that balance just right. On our income tax policies, 99 per cent of people will be paying no more on their current level of income.
“Where there is divergence at the top 10 per cent of income earners the difference between what you pay in Scotland and England is less than the cost of a prescription charge per week, so I think we’ve got the balance right. I think people essentially support the approach we are taking in Scotland, which is fair taxation and sound investment in our public services.”
Scottish Conservative shadow economy secretary Dean Lockhart said: “Over the last 18 months, Scotland’s growth rate has been around a third of that for the UK – with the result that employment is now falling in Scotland. The SNP’s plans to set tax rates higher than the rest of the UK will only worsen this growing divide we are seeing.”
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