New tax band for higher-earning Scots the ‘right choice’, Shona Robison says

By The Press Association19th December 2023News ScotlandGovernment / Politics, News Scotland

Scotland’s Deputy First Minister has insisted that asking higher earners to pay more is the “right choice” as she announced the creation of a new income tax band for those on salaries of £75,000 a year and above.

The proposed advance tax rate of 45p will be applied on earnings from this level to £125,140, Shona Robison said.

The move, which will come into force from April, is part of a series of changes to income tax north of the border that Holyrood ministers hope will help raise £1.5 billion of additional cash when compared to the tax policy of the UK Government.

The total take from income tax is forecast to rise to £18.8 billion in 2024-25, according to economic experts at the Scottish Fiscal Commission (SFC)

The changes will also see the Scottish Government increase the top rate of income tax, which is levied on the very highest earners, by 1p to 48p.

While the threshold at which people start to pay the lower bands of income tax will rise in line with inflation, Ms Robison – also the Scottish Finance Secretary – confirmed the threshold for the higher rate and the top rate would be maintained at current levels, of £43,662 and £125,140.

This will mean more Scots become eligible for these higher payments as wages rise.

However, Ms Robison said the changes would not impact those who are the “backbone of our public service”, such as teachers, police officers and nurses.

Announcing the draft Scottish Budget for 2024-25, she told Holyrood that “even chief inspectors” in the police would not see tax rates rise.

Ms Robison said: “When public services need investment and protection from Tory cuts, this Government does believe that those with the broadest shoulders should pay a higher rate of tax.”

While MSPs themselves will not be impacted by the new advance income tax rate, Ms Robison said MPs – such as Scottish Tory leader Douglas Ross, who currently sits at both Westminster and Holyrood – would have to pay more.

“In case Mr Ross is wondering, because they get paid more than £86,000, MPs will have to pay a little more tax,” the Deputy First Minister said.

The creation of the new tax band, together with the increase in the top rate of income tax, will raise £82 million next year, Ms Robison said.

She added: “Overall, taking a different, progressive course on income tax in Scotland means in 2024-25 we estimate we will have around £1.5 billion of additional revenues compared to if we had followed UK Government tax policies.”

Saying the additional money raised could be used for public services, Ms Robison told MSPs: “Asking those with more to pay more is the right choice.

“It is a choice rooted in our values and it is in stark contrast to the tax and service cuts of the Tory Party.

“In making these choices, we are supporting public services.”

As a result, she said the Scottish Government would “fully fund” next year’s council tax freeze, which had already been announced by First Minister Humza Yousaf.

Ms Robison said councils will get “over £140 million of additional investment” in 2024-25 for this – with this less than half the minimum sum of £300 million the local government body Cosla had been seeking.

Overall, councils will get a “record high” settlement of more than £14 billion next year, the Deputy First Minister added, saying this would “support our local authorities to deliver services”.

Frontline NHS boards will see a funding increase of £550 million next year, Ms Robison pledged, taking their total to more than £13.2 billion.

This was hailed by the Deputy First Minister as “above real-terms protection for the NHS in Scotland in the face of UK Government austerity and real-terms cut to the NHS in England “.

Meanwhile, ministers will spend £6.3 billion on social security next year, more than £1 billion more than the total for 2023-24.

That will see Scottish benefits go up by 6.7% in line with the CPI rate of inflation from September 2023, with the Scottish child payment, which goes to help low-income families with children, rising to £26.70 a week per child from April 2024.

Elsewhere, Ms Robison promised to invest almost £2.5 billion on public transport, along with £550 million in the supply of affordable housing – although campaigners at Living Rent said this was an “appalling” decision to “cut £200 million from the housing budget”.

Scottish Secretary Alister Jack said the Budget would deter business investment and punish Scots.

“The Scottish Government has a record block grant yet wastes hundreds of millions of pounds,” he said.

“It needs to take responsibility for its spending choices and the resultant self-inflicted budget black hole, rather than blaming the UK Government and penalising Scottish taxpayers.

“The UK Government is cutting tax for individuals and for businesses. The Scottish Government should do the same.”

Scottish Conservative finance spokeswoman Liz Smith said: “Under the SNP, Scotland was already the highest taxed part of the UK – and the income tax rises announced by Shona Robison have only widened that gap and increased the burden on hard-working Scots.

“They mean that 100,000 more Scots are now paying the higher rate of tax.

“This will have a devastating effect on our ability to recruit and retain skilled workers, including the doctors and dentists Scotland’s under-resourced NHS desperately needs.”

Scottish Labour finance spokesman Michael Marra branded it a “chaotic Budget from an incompetent Government that will leave ordinary Scots paying much more and getting much less in return”.