John Swinney rejects idea higher taxes would lead to exodus of high earners

It is possible to have higher taxes in Scotland than the rest of the UK without causing people to leave the country, according to Finance Secretary John Swinney.

Nicola Sturgeon has stated her opposition to introducing a 50p tax rate in Scotland on the basis it could lead to the highest earners either leaving the country or transferring their income into capital gains.

Analysis released by the SNP suggested that if seven per cent of top taxpayers were to leave Scotland then revenues would fall by £30m. Discussing Labour’s policy of a  50p tax in FMQs, Sturgeon said: “It would not be radical. It would be reckless. It would not be daring. It would be daft.”

However, speaking at the Holyrood economy hustings, the SNP’s deputy leader rejected Tory candidate Murdo Fraser’s claim that higher taxes in Scotland would make would make the country uncompetitive.

Fraser said: “We want entrepreneurs and business people to come to Scotland, not drive them away, and having higher tax rates in Scotland than in the rest of the UK will do precisely that and it will be bad for business.”

Swinney responded: “Murdo [Fraser]’s point that there could be no circumstances imaginable where we could have a different or higher tax position compared to the rest of the United Kingdom is one that doesn’t stand up to scrutiny.

“People will face different propositions from their public services in Scotland compared to what they will get as a tax payer south of the border. So free personal care for the elderly, university tuition fees, prescription charges, these are differently charged in Scotland, differently dealt with in Scotland, compared to the rest of the United Kingdom.

“People will be making a broader judgement about their quality of life, about the things they get from public services in Scotland balanced against the tax they pay.”

He continued: “The second point is about the importance of knowing, confidently, that you can generate the tax income you require to support public services."

He added: “We can’t be cavalier about thinking that money will come, when there is a reasonable amount of evidence and analysis to suggest money might not come, because that would then put in jeopardy public services.”

The SNP has stated it will reconsider the possibility of introducing a 50p tax after 2017-18.