FINANCE Secretary Derek Mackay is preparing to use new borrowing powers handed to Scotland “to the max”.

As part of the new devolution settlement following the 2014 referendum, Scottish ministers will be able to borrow up a maximum annual limit of £450 million.

Mackay told members of Holyrood’s finance committee yesterday: “In terms of our new powers from the Scotland Act, we will use [borrowing powers] to the max.

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“Our proposal is to set out further spending plans around borrowing and we fully anticipate using them to the cap of £450 million.”

Mackay came under fire from the Scottish Greens and Tories over his income tax policy.

The Scottish Greens co-convener Patrick Harvie pressed him on why ministers had not made wider changes to income tax bands and rates now they had the power to do so.

While the UK Government is to raise the earnings threshold for the higher 40p tax rate from its current level of £43,000 to £45,000, the Scottish Government has insisted it will not pass on “the Tory tax cut” to the group.

Instead, the threshold in Scotland will rise in line with inflation to £43,430.

But Harvie believes the measure does not go far enough in creating a fairer tax system.

He said afterwards: “An inflation-based increase in the higher-rate threshold will only benefit high earners, who have already benefited from UK Government policies.

“The Scottish Government is quite unable to justify this.”

He added: “The SNP has argued for progressive taxation over many years, and they now have the power to make it happen.

“It will be a huge missed opportunity if they dig in their heels and insist on a no-change tax policy now they have the power, and the political support, for real change to cut poverty and inequality in Scotland.”

Mackay said “at this time of uncertainty” the proposals from the Scottish Government would provide “continuity on the rates and bands but ensure that we are able to generate more income from a different position on tax from the UK Government”.

MSPs will vote on the budget in February and, as the SNP does not have a majority in Holyrood, it will need the support of another party, most likely the Scottish Greens, to get the budget passed.

But Mackay also defended the Scottish Government’s income tax plans after they were attacked from the other side of the political spectrum.

Tory finance spokesman Murdo Fraser said higher earners would pay more tax north of the Border than elsewhere in the UK. Mackay responded: “We’re not passing on the tax cut for some of the richest in society, I think that’s the right thing to do.

“But 99 per cent of adults will pay no more tax given their current level of income than in 2016-17.

“The message that Scotland is high tax has really been put out by the Conservatives and I think that is unhelpful when it’s the wider package that is important, and of course quality of life in Scotland.”