FIRST Minister Nicola Sturgeon has said the Scottish Government may be forced to hike taxes in a bid to save Scotland’s public services from biting Tory austerity.

The SNP leader, launching a discussion paper which detailed four possible new proposals, and studied the approaches supported by her party, the LibDems, Labour, the Greens and the Tories, said it was time to talk about the role of income tax in Scotland.

Sturgeon said it would be wrong to assume higher tax rates would definitely be in the Scottish Government’s draft budget, due to be published in just over a month, but because of Brexit and austerity it seems likely “modest additional contributions” may be needed to “protect the things we hold dear”.

The First Minister was speaking just before the Bank of England's Monetary Policy Committee raised interest rates from 0.25 per cent to 0.5 per cent - the first hike in 10 years.

Sturgeon said any change would, however, have to meet four criteria.

They would need to maintain the current level of standards on public services, make the tax system more progressive, support the economy, and ensure the lowest-earning taxpayers pay no more.

“Nothing is a foregone conclusion until the budget is not just presented but passed, but I think you can get the sense from this paper today, what I have said previously and what I am saying today, that I think the time is right to consider modest additional contributions to protect the things we hold dear,” she said.

Three of the Government's four approaches include a 50p additional rate and incremental changes to the basic and higher rates.

While one increased tax bands from three to six. This once would see rates cut by a penny for those earning up to £15,000. While those earning less than £24,000 would pay the current rate. 

Those earning between£24,001 and £44,290 would be subject to a new rate of 21p. 

The approaches could raise between £80 million and £290m in additional revenue.

Sturgeon said: “All of the four alternative approaches at least protect those earning less than the median income which is £24,000, and when the increase to the personal allowance is taken into account none of these approaches would see anyone earning up to £31,000 pay a penny more than they do now.

“In all four approaches more than 70 per cent of all adults would continue to pay no tax at all or no more tax than they do today.”

Finance Secretary Derek Mackay will hold talks with other parties and businesses ahead of the budget, in a bid to win support.

In their last manifestos, the SNP and the Tories have a similar position, both backing no change in the basic, higher or additional rate of tax, differing only on how high to raise the higher tax threshold.

Labour called for a penny to be added to the basic rate and the higher rate, and 5p to be added to the additional rate.

The Greens wanted the basic rate down by 2p for those earning less than £19,000, but increased for anyone earning more, and a 15p hike on the additional rate.

While the LibDems wanted an extra penny added to the basic, higher and additional rate.

According to the Scottish Government’s analysis, the SNP and Tory plans would have made no difference to the take-home pay of someone earning £25,000 a year, while the Green proposals would have seen them get an additional £23 in their wage packet, and Labour and the LibDems would have cost them £132.

For those on £50,000, the Tory plans would have amounted to a tax cut, giving them an extra £432, while the Greens would cost them £534, Labour £763 and the SNP £382.

Holyrood took control over income tax rates and thresholds in 2016, but there has been no change to the basic rate so far. During First Minister’s Questions, Tory leader Ruth Davidson said Scotland’s tax regime needed to be simple and competitive.

“The reason why we support a competitive tax regime is that we believe that it will develop Scotland’s economy, boosting the income tax that we need for our schools and hospitals. We do not think that it is right that every Scot earning more than £24,000 should have to pay more. The bottom line is about getting growth, and we are lagging behind. Scotland’s economy is currently growing at a third of the rate of the United Kingdom economy.”

Jackie Baillie, covering for an unwell Alex Rowley, said the First Minister’s sums did not add up.

“To end austerity, [the First Minister] needs to raise more than £800m in revenue over the next two years. That is before we consider additional commitments. However, the Government proposals that have been published today in the tax paper would raise a maximum of £290m. That does not even come close to closing the gap.

“There is a black hole in the budget, so more services will end up being cut.”

Patrick Harvie said he was glad the SNP had now seen “the strength in what the Greens have been advocating for the past couple of years”.