22 Nov 2017
Budget 2017: Chancellor puts pressure on SNP with income tax cut
Big earners in Scotland can only look on enviously as their counterparts in other parts of the UK celebrate a cut in their tax bills.
Chancellor Philip Hammond announced in today’s Budget that the threshold for those falling into the higher rate band south of the border is going up from £45,001 to £46,350 in 2018-19.
The UK Government is also committed to raising the higher rate threshold to £50,000 by 2020.
But in Scotland this higher rate band of 40% already kicks in at £43,000 – and worse could be on the way from the Scottish Parliament.
At the start of this month, the Scottish Government announced the publication of a discussion paper examining the role of Income Tax in Scotland’s budget.
'Debate'
The First Minister Nicola Sturgeon has called on all political parties to engage in an open debate about tax in Scotland.
She said: “As the impact of austerity, Brexit and changing demographics bears down even harder, it is now time to ask ourselves some tough questions.
“None of us want to see our cherished public services increasingly constrained in what they can deliver.
“So, with all the pressures we now face, we must consider if the time has come for those who earn the most to pay a modest amount more to enable us to do so.”
Firm policy proposals are expected in the draft Scottish Budget on Thursday, December 14.
Tory leader Ruth Davidson said: "SNP ministers must look again at their reckless plans to raise income tax in Scotland.
“As a result of the Chancellor’s decisions today, they are getting £2billion extra funding to help meet their own spending commitments.
"With Income Tax and Stamp Duty being cut south of the border, there is a growing tax gap between people in Scotland and elsewhere in the UK.
“The SNP can’t keep hitting Scots in the pocket – and need to hold off further tax rises in the Holyrood budget next month. The case for raiding the pay packets of ordinary Scottish families has collapsed."
Business happy
The Federation of Small Businesses (FSB) in Scotland has broadly welcomed the Chancellor's Budget announcements.
Andy Willox, the FSB’s Scottish policy convener, said: “The last thing that Scottish small firms wanted was a Budget which pulled the rug from under them. The Chancellor’s solid plans will give many in business a little of the stability they crave.
“As many as 190,000 Scottish micro-businesses – like crofters, musicians and start-ups - could have been hit had the VAT threshold been lowered. Instead, FSB is ready to work with the Treasury to simplify an over-complicated tax.”
But on the subject of Income Tax and the Scottish Government budget, Mr Willox said: “With only 15 working days until the Scottish Government’s budget statement, Finance Secretary Derek Mackay has to ensure that any efforts to raise revenue don’t undermine the economy.”
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