Scotland to INCREASE income tax
Scotland will increase income tax for middle and high-earners, the Finance Secretary has revealed.
Public sector workers including police, nurses, firefighters and teachers will get a 3% pay rise (if earning less than £30,000; 2% if more).
The controversial move to increase income tax breaks away from the UK Government's approach and may be unpopular.
However, the increase in public sector pay is more generous than Chancellor Phillip Hammond's relaxation of pay caps in the recent budget.
Derek MacKay, Scotland's Finance Secretary, said,
"The 2018-19 budget will demonstrate beyond doubt where the Scottish government’s priorities are: stopping UK cuts, protecting public services and unlocking Scotland’s economic potential.”
Will I be worse off?
If you live in Scotland and earn more than £33,000 you will pay more tax.
MacKay stated that 70% of Scottish tax-payers earn less than this and will not pay more than they previously did.
Scotland's New Tax Band
- 19p Starter rate from £11,850 to £13,850
- 20p Basic rate from £13,851 to £24,000
- 21p NEW Intermediate rate from £24,001 to £44,273
- 41p Higher rate from £44,274 to £150,000
- 46p Additional rate from £150,000
By using its devolved tax powers differently to the tax stance of the UK government, the Scottish administration hopes to show voters than it can manage the country’s economy and burnish the case for independence.
After the failed independence referendum in 2014, Scotland was promised more powers, including being able to levy income tax.
This was confirmed in the Scotland Act 2016, and this is Scotland's first independent financial budget.
The money raised from increasing income tax will go to funding the NHS, childcare, education, and the police.
The income tax changes will also only involve those earning over £30,000, which is £6,000 higher than the median salary in Scotland, so these changes will only affect those who are relatively better off.
Nobody likes paying income tax, yet alone more income tax, so the SNP may struggle to get the support that they need to pass their Budget in 2018.
However, this is a break from the SNP election promise not to raise taxes.
The SNP ran their 2015 Scottish Parliament election campaign on a promise not to increase income tax, a promise that they reiterated 53 times during the campaign, yet just a few years later, they are doing a U-turn on their promise.