Labour calls for an immediate 1p Scottish income tax rise

Scottish Labour has called for a 1p hike in Scottish income tax under existing devolved powers that it claims would raise about £500m every year and avoid cuts to education and other local services.

The Scottish government under the SNP has so far argued against such moves because current powers devolved under the Scotland Act 2012 demand any changes in income tax rates would need to be replicated across all bands.

That, the SNP government claims, would mean the least well-off would be hit hardest by any increase.

But Scottish Labour said its plan for a 1p rise in income tax across all bands from April would be offset by taxpayers earning less than £20,000 receiving a £100 annual boost to their income through a payment scheme.

The £100 payment, which would be administered by councils, would be “far in excess” of the additional £20 which someone earning just above the minimum wage would pay in income tax over the course a year, the party said.

Labour explained that under the plan, someone on a salary of about £30,000 a year would pay less than £4 a week extra.

But someone on the same £144,687 wage as the first minister would pay an extra £28 a week (£1,447 a year), it said.

The move to increase income tax by one penny mirrors a pre-election proposal put forward last week by the Scottish Libral Democrats.

The Lib Dems said they had committed to increasing income tax by a penny in order to fund what they say would be “the biggest investment in Scottish education since devolution”.

The pre-election policies come as Scottish political parties prepare for new devolved powers over income tax rates from April, with yet more flexible powers due later under the Scotland Bill.

The Scottish government has already said it will not alter income tax rates until these greater powers come into force, despite this being unlikely to happen until next year at the earliest.

In his draft budget, which was unveiled in December, Finance Secretary John Swinney said he would be keeping income tax rates in Scotland the same as the rest of the UK in 2016/17.

He said he hoped the greater flexibility in setting income tax rates offered by the Scotland Bill proposals would allow the Scottish government to introduce a “more progressive” tax regime in the future.

Scottish Labour’s proposal unveiled today would mean that income tax rates in Scotland would be higher than elsewhere in the UK.

Speaking ahead of Mr Swinney’s budget statement tomorrow, Scottish Labour leader Kezia Dugdale, said: “Given the choice between using our powers or making cuts to our children’s future, we choose to use our powers.

“We will tear up this SNP budget that simply manages Tory cuts and instead use the power we have to set the Scottish rate of income tax 1p higher than the rate set by George Osborne. This will provide an extra half a billion pounds a year to invest in the future.

“We don’t do this because we want to use the powers for their own sake. We do it because there is no other alternative to cutting into our nation’s future.”

Responding to Labour’s proposal of an 11p Scottish rate of income tax, Patrick Harvie MSP, Finance and Economy spokesperson for the Scottish Greens, said: “The ability to adjust the Scottish rate of income tax to make the tax take progressive is extremely limited and what Labour have proposed would involve extra complexity and cost. The Scottish Greens will focus on the opportunity to adjust rates and bands, due to be devolved through the Scotland Bill, and on a shift in taxation away from income and towards wealth to tackle the appalling wealth gap in our society.”