Budget: SNP and Labour slam income tax breaks as new powers loom

Yesterday’s Budget announcement by Chancellor George Osborne saw the battle lines for the upcoming Scottish government elections begin taking shape as income tax emerged as the contested ground.

Both the SNP and Scottish Labour came out in opposition to plans announced by Mr Osborne to raise the starting point at which workers in Scotland pay the 40p higher tax rate.

Yesterday was the last time that the UK Chancellor will set the tax rates for Scotland as from April 2017, the Scottish parliament will be able to set the rate of income tax allowing it the option of not implementing Mr Osborne’s plan to raise the 40p threshold from £42,385 to £45,000.

Both the SNP’s Stewart Hosie and Labour’s Ian Murray said it was the wrong time to cut such taxes.

However, the Chief Secretary to the Treasury Greg Hands said that the Conservative government’s Budget was designed to create growth.

Mr Hands said: “We are investing £100bn in the course of this parliament in infrastructure and there was some major announcements yesterday in terms of the supply side.

“We will see what the Scottish government does with the money that will be available, about £650m over the course of this parliament for investment in public services in Scotland.”

However, Mr Hosie said that while his party was yet to announce its plans for the new tax powers heading to Holyrood the SNP opposed the tax breaks.

He said: “We were very clear yesterday that this is the wrong time to be putting in a rise to the 40p threshold which is many, many times the rate of inflation, when at the same time, on the same day, the Chancellor was announcing billions of pounds worth of cuts to people with disability, that is the wrong decision at the wrong time.”

Mr Murray said Scottish Labour had “already set out” that when Holyrood received the new powers - laid down in the Scotland Bill - it would not adopt the higher rate threshold change.

He said: “There is no problem with an inflationary increase to these things but at this time you are requiring to get out of this spiral of austerity and get out of the spiral of low growth.

“We need to be investing in the future of Scotland and that is why we wouldn’t take those particular issues.”