Scottish Budget 2018: Derek Mackay 'won't cut tax for richest at expense of public services'

Derek Mackay delivered his Budget for 2019/20 and announced that the tax threshold for higher rate income tax payers would be frozen, meaning people earning more than £43,430 will pay more than people in the rest of the UK.

The Tories said Scotland is the highest taxed part of the UK under the SNP but Mr Mackay said it was the “fairest taxed part of the UK”.

The tax plans means the basic rates of income tax remain unchanged but the thresholds for the starter rate and basic rate will increase with inflation in April and the higher rate will stay the same.

Mr Mackay said for someone earning £62,000, the salary of an MSP, they will pay £30 per week more in Scotland than in the rest of the UK.

He said: “Now is not the time to cut tax for our higher earners at the expense of public services.”

Mr Mackay said: “Our decisions on taxation have resulted in a more progressive tax system, protecting those lower and middle income taxpayers, while raising additional revenue to invest in our public services and the Scottish economy. Those priorities will continue to be front and centre of our tax policy in the year ahead.

“Freezing the higher rate tax threshold will ensure Scotland’s health and care services gets the full budget increase they deserve, despite a £55 million shortfall from the UK Government’s autumn budget.”

In his budget the Finance Secretary said he was increasing the cash for the NHS, education and local government.

He said the health budget would increase by £730m a real terms increase of £500m, and councils would get £11.1bn which he said was also a real terms increase.

Labour however said that local government was being short changed and the settlement was £1bn less than what Cosla said was needed.

He said the public sector pay deal means a 3% rise for workers earning up to £36,500 and 2% for those between £36,500 and 80,000 and a cap for those earning above £80,000 of £1600.

The plans were attacked by the Tories as a high tax budget.

Financial forecasts show that income tax will raise £11,684m, for the Scottish Government an extra £232m and the higher rate threshold freeze will raise £68m.

Conservative Finance spokesman, Murdo Fraser said a police seargent would pay £700 more tax in Scotland than in England, a Nurse manager £1350 and a Principal Teacher £1500 more than if they worked in England.

He said: “That is the price of living in SNP Scotland.”

And he said the settlement for local government was £1bn less than what Cosla said was needed.

Labour said the budget meant a cut of £95m for councils.

James Kelly, finance spokesman said: “Public services are at breaking point, head teachers are writing to parents about unprecedented cuts, one in four children in Scotland are living in poverty and our rail system is in crisis.

“Scotland is being let down by Nicola Sturgeon’s timid government and Derek Mackay’s timid budget.”

The budget was met with disappointment from anti poverty campaigners who said the increase in tax should be spend on tackling child poverty.

John Dickie, the Director of the Child Poverty Action Group, said:“Whilst existing anti-poverty spending commitments including on Best Start Grants are welcome, this budget so far represents a missed opportunity to go further and, at the very least, allocate the resources raised by freezing the higher rate tax threshold to lift thousands of children in Scotland out of poverty. “

Neil Cowan, Poverty Alliance said:“One million people in Scotland - including 230,000 children - are currently living in the grip of poverty, and this budget offered the opportunity to take the urgent action needed to loosen this grip. We have been calling on the Scottish Government to bring forward the delivery of the new income supplement, which is due to be introduced by 2022, and to deliver the supplement by topping up child benefit.”

Business leaders however were pleased with measures for small firms.

Andrew McRae, Federation of Small Business Scotland policy chair, said: “Like smaller firms across Scotland, Derek Mackay today showed that he’s getting on with business despite the Brexit backdrop.

“This is a mostly savvy budget proposal that should give smaller firms some much needed stability.”

Mr Mackay had announced a cap on business rates which he said meant 90% of properties and all SMEs will pay less than in the rest of the UK.