Meeting of the Parliament 20 February 2018
HM Treasury will release for the Scottish Government to draw down only what the SFC has forecast is the appropriate amount. That is the reality. That is the guidance. A Government cannot, with the best will in the world, just make up the amount of resource that it would like. The resource that we will have will be the resource that the SFC says is the appropriate amount. That mechanism drives what the Scottish Government has at its disposal. The Labour Party, with its alternative budget with all its mistakes and inadequacies, cannot escape the fact that the Treasury will give us resources only on that basis. This Parliament—of course, this was called for partly, and agreed to, by the Labour Party—is bound by that formula.
What we will have at our disposal will in part be due to the decisions that we take on public sector pay, which the SFC forecasts will boost income tax revenues by £62 million in total. Should local government decide to follow our lead on pay—it certainly has the resources at its disposal to do so—that will boost revenues further.
A recent YouGov poll shows that there is public support for our proportionate approach, with more than half of Scots supporting our income tax proposals. As a result of UK Government austerity, between 2010-11 and 2019-20 the Scottish real-terms discretionary block grant will have been cut by £2.6 billion, with £500 million of cuts in the next two years alone. This is not the time when we should tax people at the lowest end of the income tax spectrum more—I see how the Tories sneer when people at the lowest end of the earnings table are mentioned.
I propose to protect the lowest-earning taxpayers and to introduce a more progressive tax system that contributes to greater tax fairness in Scotland and raises additional revenue to support vital public services and invest in the economy. I believe that those actions, alongside the spending plans for 2018-19, will make Scotland a more attractive place to live and work in, with access to many services that are not available elsewhere in the UK.
Living in Scotland ensures access to an NHS that is well funded, gives families access to increasing amounts of free childcare, and means that students pay no education tuition fees, that there is no prescription tax on ill health, and that our older generation can benefit from free personal care.
In the international context, Scotland’s overall tax as a proportion of gross domestic product was below the Organisation for Economic Co-operation and Development average in 2016. Again, that reinforces the fact that Scotland is not a highly taxed economy. The steps that we are taking today will ensure that it is a fairly taxed country.
I move,
That the Parliament agrees that, for the purposes of section 11A of the Income Tax Act 2007 (which provides for income tax to be charged at Scottish rates on certain non-savings and non-dividend income of a Scottish taxpayer), the Scottish rates and limits for the tax year 2018-19 are as follows—
(a) a starter rate of 19%, charged on income up to a limit of £2,000,
(b) the Scottish basic rate is 20%, charged on income above £2,000 and up to a limit of £12,150,
(c) an intermediate rate of 21%, charged on income above £12,150 and up to a limit of £31,580,
(d) a higher rate of 41%, charged on income above £31,580 and up to a limit of £150,000, and
(e) a top rate of 46%, charged on income above £150,000.
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