Scottish budget: MSPs reject Labour's tax plan

MSPs have voted down Labour plans to increase the Scottish Rate of Income Tax (SRIT), following heated exchanges in the Scottish Parliament.

Kezia Dugdale this week released plans to increase the Scottish Rate of Income Tax (SRIT) by 1p above the level contained in Finance Secretary John Swinney’s 2016-17 draft budget.

Scottish Labour’s plan included a £100 annual payment to those earning under £20,000.

However, MSPs rejected the proposal, with SNP members describing powers over SRIT as a “blunt tool” and claiming any rise would hit working people hardest.

RELATED CONTENT

Treasury Minister Greg Hands will travel to Scotland in effort to reach fiscal framework deal

Nicola Sturgeon urges councils to accept funding offer to ensure care workers are paid the living wage

Scottish Labour leader Kezia Dugdale to call for 1p income tax rise

Scottish Labour argued Swinney’s refusal to back the tax rise, which it advocated as a means of protecting public services, undermined the SNP’s claims to oppose austerity, with MSP Jackie Baillie describing the budget as “austerity on stilts”.

Questioning Labour’s plan, Swinney said: “The limited nature of the income tax power currently available to the Scottish Parliament only allows for a single rate to be set and then applied to all three income tax bands.

“This means that any increase on the wealthiest would also apply to the lowest income tax payers. Proposals from other parties to increase income tax by 1p next year will hit those tax payers least able to pay.”

Baillie urged the Finance Secretary to back the party’s planned tax rise. “It is not too late for the SNP - we could work together to end Tory austerity in Scotland,” she said.

“You used to want to do so - to invest in our children, to invest in our economy, to invest in our future. For all his noise, he knows how painful these cuts are, and he knows he doesn't have to do this."

Meanwhile, Scottish Conservative MSP Murdo Fraser backed the SNP’s proposed tax rate. “We are happy to be better together with the SNP,” he said, a reference to the pro-union campaign during the 2014 independence referendum.

Fraser said: “We have always believed that people in Scotland should not be taxed more highly than those in the rest of the United Kingdom.

“Labour are in a mess along with the Lib Dems who want to clobber hard working Scottish families.

“Our package of proposals would put the Scottish economy first and foremost, always conscious of the fact that a growing economy is necessary to widen the tax base, and increase the tax rate.

“The Scottish Conservatives are happy to go into the coming election as the only party defending hard-pressed Scottish households who feel that they are already contributing quite enough to government coffers.”

The Scottish Lib Dems last week suggested a similar move to Labour’s, which the party claimed would raise around £500m to protect education spending. Leader Willie Rennie said Swinney had the power to mitigate austerity but had chosen not to do so. Green co-convener Patrick Harvie argued the budget should focus on taxing wealth, rather than through income tax.

Rennie said: “He is imposing the kind of budget that he has previously condemned.

“The people of Scotland will know that his refusal to act means that every single cut to public services in Scotland is a John Swinney cut. He cannot point anywhere else anymore.”

Harvie said: “In light of our call for Ministers to ensure local government has adequate funding to pay care workers a Living Wage, the commitment outlined today by the Government is welcome.

“However, the wider context is that this is a budget lacking in local democracy, and goes in the wrong direction on fuel poverty and sustainable transport.

“Labour are right to say that public services can only be protected if we raise the revenue that's needed. This is a case we've been making for several years now, but Labour's proposal on Income Tax would place a greater burden on income when it is the huge wealth inequality in our society we should be tackling.”