Conservative commission calls for new Scottish income tax band

Recommendations made included:

The commission’s report recommended that the new “middle band” of income tax should be set at about 30 per cent, and warned politicians against raising the upper rate of tax, which it said could “drive out wealth creators”.

It makes also makes a series of specific recommendations on the basket of new and existing powers coming to the Scottish Parliament.

The Scottish Conservatives said they hope the issue of tax will help put clear water between itself and the other parties as they aim to replace Labour as the main opposition in the Scottish Parliament when voters go to the polls on 5 May.

Scottish Labour has a firm commitment to raising the top rate from 45 per cent to 50 per cent, with the party saying the additional revenue would go towards tackling education inequality.

The commission’s report said that the “significant” new tax powers coming to the Scottish Parliament next year presented both “risks and opportunities” to the country.

Writing in the foreword to the report, Sir Iain said: “To a large extent the Scottish Parliament to date has been sheltered by the Barnett Formula from the tough political decisions that are necessary to balance the imposition of taxes on Scottish taxpayers on the one hand with public spending on the electorate’s behalf on the other. But these days will come to an end in April 2017.”

“From now on the debate in Scotland needs to include tax as well as matters concerned with spending and I thank and pay tribute to Ruth Davidson for her forward-looking decision to propose the setting up of the Commission. I hope very much that this report will stimulate a rigorous debate on Scotland’s international competitiveness and the contribution that competitive and fair taxes can make to improving Scotland’s economy.”

The SNP said it favoured introducing a “more progressive” income tax regime when the Scottish Parliament is given greater flexibility in setting income tax rates from next year.

Commenting on the Conservative Party’s tax proposals, SNP MSP Kenneth Gibson said: “These proposals are a series of un-costed set of tax cuts which largely benefit those on higher incomes and the biggest businesses – while starving public services of potentially billions of pounds of investment over the next few years.

“But it is hugely hypocritical of the Tories to try to position themselves as being against tax rises – when the reality is they want to hike household bills by reintroducing taxes on the sick and on higher education, and a Tory council wants to hike council tax by an eye-watering 18 per cent.

“If the Tories want to cut income tax for higher earners, then they must spell out exactly how much this will cost, and what services they will cut to pay for this.

“Under the SNP Government, businesses in Scotland have the most attractive package of business support anywhere in the UK, with 100,000 businesses benefitting from our Small Business Bonus Scheme.

“Meanwhile, analysis from SPICe published today shows that twice as much is being spent per head on economic development in Scotland compared to the rest of the UK.

“While the Tories want to cut taxes for the rich, the SNP are committed to a tax system that is progressive and fair – and voters will have a clear choice at this year’s election.”