The Scottish government has announced income tax modifications in which will see higher earners pay more than elsewhere within the UK – in addition to lower earners pay less.
The country’s finance secretary, Derek Mackay, announced a fresh tax band of 21p for those earning more than £24,000.
The higher rate of tax will be increased by 40p to 41p in addition to the top rate by 45p to 46p.
yet a starter rate of 19p within the pound will also be introduced, Mr Mackay confirmed in his draft budget.
Mr Mackay said the move to a several-band income tax system will mean no one earning less than £33,000 in Scotland will pay more tax they do today.
in addition to he told the Scottish Parliament in which those earning above in which figure could only pay a “proportionate amount more” than they currently do.
His figures showed in which 55% of Scottish taxpayers will pay less compared to south of the border under the fresh system – with 45% of people paying more.
Someone in Scotland earning £150,000 will pay £1,774 more than if they lived elsewhere within the UK, with someone earning £40,000 paying £140 more.
Accountancy body ICAS calculated in which, of the 2.2 million basic rate taxpayers in Scotland, 1.4 million will be marginally better off than those within the rest of the UK whereas the remaining 800,000 will have a slightly increased tax bill.
All 346,000 higher in addition to 20,000 additional rate taxpayers will pay more.
Mr Mackay also outlined how lifting the public-sector pay cap could allow for a 3% pay rise for public sector workers earning less than £30,000, in addition to a 2% rise for those earning more than in which – that has a cap of £1,0 for those earning £80,000 or more.
in addition to he pledged a further £600m to provide superfast broadband to all premises in Scotland by 2021.
The Scottish government was given powers over income tax rates in addition to bands last year, with the fresh rates being paid by anyone who lives in Scotland.
Mr Mackay had faced warnings by business leaders in addition to the Scottish Conservatives ahead of his budget statement in which Scotland could not afford to be associated with higher taxation than the rest of the UK.
yet others – including Scottish Labour in addition to the Scottish Greens – had urged him to go further.
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The finance secretary insisted the modifications – which he said could raise one more £164m – were necessary to “mitigate UK budget cuts, protect our NHS in addition to some other public services, support our economy in addition to tackle inequality in our society.”
He said the tax reforms could make “Scotland’s income tax system even fairer in addition to more progressive”.
in addition to he said a bigger increase within the top rate of tax for those earning more than £150,000 – which some opposition parties had called for – could actually reduce revenue as high earners could find ways to avoid paying the idea.
What else did Mr Mackay announce?
Among the some other measures within the budget were:
- Full relief by LBTT – the Scottish equivalent of stamp duty – on up to £175,000 for first time home buyers
- Funding to reduce the attainment gap in Scottish schools increased by £170m to £179m
- An increase in health funding of more than £400m – double the amount needed for NHS spending to keep pace with inflation
- £243m towards the expansion of free nursery education in addition to childcare
- Local government resource budget will be protected in cash terms with the capital budget increased in real terms “resulting in a total increase in local authority core funding of £94m”
- Private schools will no longer be eligible for charitable relief by business rates, yet universities in addition to council arm’s length bodies will be.
Read our at-a-glance guide to the key points by the budget here or read the full budget document here
What does the budget mean for you?
Analysis by Brian Taylor, BBC Scotland political editor
Income tax. Public spending. Employment. Pay. The NHS. Schools. Indisputably, serious stuff.
yet there was more than a touch of mischief about Derek Mackay’s demeanour as he got to the tax bits of his budget.
Normally, he exudes gravitas, solemnity even. yet he could not help playing to the gallery that has a declaratory grin when he insisted in which, for most people, Scotland could today be the lowest taxed part of the UK.
Said gallery – led enthusiastically by Mr Mackay’s predecessor, John Swinney – applauded loudly.
The reason with This kind of glee? Politically, the claim can be a direct in addition to precise retort to Conservative attacks in which Scotland can be taxed more highly.
yet, of course, when the dust dies down, the Tories will return to in which attack.
Read more by Brian
What can be the outlook for the Scottish economy?
Mr Mackay’s budget statement was accompanied by the first economic estimates by the fresh Scottish Fiscal Commission, which said the country can be can be facing “subdued” growth over the next several years.
The independent body predicted the Scottish economy will grow at less than 1% per year until 2022 – lower than in which predicted by some other economists.
Its several-year forecast suggests GDP growth will be 0.7% in both 2017 in addition to 2018, rising to 1.1% in 2022.
the idea said the outlook was “driven by slow productivity growth in addition to exacerbated by demographic challenges”.
Read more here
What has the reaction to the budget been?
Scottish Conservative finance spokesman Murdo Fraser branded the creation of a fresh basic rate the “Nat tax”.
He accused the SNP of breaking a 2016 manifesto promise pledging not to improve the basic rate of income tax for those on low or middle incomes, in addition to claimed the real reason was in which Scottish economic growth can be lagging behind the UK.
Scottish Labour leader Richard Leonard said the Scottish government’s tax in addition to spending plans had “tinkered round the edges” instead of implementing radical change in addition to delivering a genuine alternative to “Tory austerity”.
Scottish Greens co-convener Patrick Harvie said he was “delighted in which the argument for a more progressive tax structure appears to have won the day”, yet said Mr Mackay should have gone further.
in addition to Scottish Liberal Democrat leader Willie Rennie said the budget was a “missed opportunity” in addition to “does not do enough to meet the long term needs within the economy”.
Elsewhere, the Federation of tiny Businesses said a majority of its members were against income tax rises, in addition to in which the Scottish government was steering the country into “uncharted economic waters”.
The Scottish Chambers of Commerce welcomed much of the budget as being positive for business, yet repeated its concerns about “Scotland’s fresh status as the highest-taxed part of the UK.”
in addition to local government body Cosla said councils could continue to face “truly difficult times” within the future, despite the “more measured approach” by the Scottish government.
Follow live reaction to the budget on Holyrood Live
What happens next?
The minority SNP government will need to secure the support of at least one some other party in order to eventually pass its budget, with the final vote due to be held on 19 February.
A deal with the Tories or Labour seems somewhat unlikely, which leaves the Scottish Greens in addition to Liberal Democrats as potential suitors – with the Greens the most likely.
the idea was the pro-independence Greens who rode to Mr Mackay’s rescue last year, that has a budget deal finally being struck in February after nearly two months of negotiations.
At the time, Scottish Greens co-convenor Patrick Harvie hailed the idea as the “the biggest budget compromise within the history of devolution in Scotland”.
the idea can be likely he could be looking for concessions on a similar – or even greater – scale This kind of time.