Scottish income tax changes expected to be agreed

MSPs are preparing to sign off proposals to reform income tax in Scotland, which would see new rates and bands set up.

Finance Secretary Derek Mackay said the new starter rate of income tax, combined with an increase in the personal allowance, will result in 70 per cent of all income taxpayers paying less tax than they do this year on current incomes and raise additional revenue to support vital public services and investment in the economy.

The plans for a five-band system would cut bills for lower earners but raise them for others.

Mackay said: “The Scottish Government has faced continued austerity from the UK Government.

“Over a ten year period, Scotland’s block grant will have been cut by £2.6 billion in real terms and we face a £500 million real terms reduction in spending on day-to-day services over the next two years.

“Our progressive approach to reforming income tax will deliver greater tax fairness and protect the lowest earning taxpayers in Scotland.

“By using our devolved income tax powers we will ensure we have an additional £428 million next year to support a budget that will help mitigate UK budget cuts, protect our NHS and other public services, support our economy and tackle inequality in our society. 

“This is an important day for Scotland’s future and I hope parliament comes together to back our proposals and set income tax rates that will help deliver the best outcomes for the people of Scotland.”

The proposals are expected to pass a vote in Holyrood later, as part of a budget deal between the SNP and the Greens.

However, the Conservatives and Labour oppose the changes.