Scottish budget passed

Written by Tom Freeman on 22 February 2018 in News

Scotland's income tax system will converge from the UK for the first time after Holyrood passes budget

Scottish Parliament - Anita Gould

The Scottish Parliament has approved the Scottish Government's spending plans for 2018/19.

MSPs voted 70 to 56 to back Finance Secretary Derek Mackay's budget after the Scottish Greens won a number of concessions.

This means Scotland's income tax will be significantly different to elsewhere in the UK for the first time.

The new five-band tax system will create a 19p starter rate for lower earners, a 21p intermediate rate for those earning more than £24,000, and add 1p to each of the higher and additional rates, making them 41p and 46p respectively.

The higher rate threshold will be set at £43,431 rather than the £44,274 originally proposed as part of the deal with the Scottish Greens.

Other concessions won by the party include £170m more for local authorities than in the original draft budget, and a commitment to give a three per cent payrise to more public sector workers.

Mackay told MSPs: "The budget delivers on the commitments that the First Minister made in the programme for government. It prevents the negatives that come from Westminster austerity and turns real-terms reduction in resource into growth. It will create a more equal society, tackling inequality and growing our economy."

However the Scottish Greens have warned the council tax must be replaced if future budgets are to win their backing.

In a letter to First Minister Nicola Sturgeon, the party's co-convener Patrick Harvie said: "Full replacement of the current system of Council Tax will require time for consultation, legislation and implementation. However the initial steps must be taken in order for progress to take place over the rest of the parliamentary session."

Scottish Conservative Adam Tomkins said: "Pay more, get less; that is the message of today’s budget.

"It is a budget that puts up taxes, despite the fact that the Scottish Government’s block grant will go up this year. It is a budget that increases our rates of income tax, despite the SNP promising more than 50 times in the past two years not to do that. It is a budget that will do nothing for consumers and that will damage Scottish business—damage that could take years to repair, according to the Scottish Chambers of Commerce.

"Perhaps most seriously of all, this is a budget that does nothing to address the fundamental problem with the Scottish economy: growth that is chronically low, relative to growth in the rest of the UK."

Scottish Labour's Monica Lennon said 28,000 local government jobss have been cut in the past seven years, illustrating the cuts to local services.

"The bottom line is that the SNP’s tax plans are timid and will not solve austerity," she said.

 

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