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

Scottish Labour leader Kezia Dugdale will today call for a 1p increase in income tax rates in an effort to avoid cuts to education and other local services.

The party claims the commitment, which would extend across the lifetime of the next parliament, would raise around £500m a year.

Lower income taxpaers will be the “biggest winners” of the policy, Dugdale will say, after Scottish Labour promised a £100 annual payment for low-earners would accompany the income tax rise.

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Finance Secretary John Swinney has already ruled out increasing income tax rates when Holyrood is handed new financial powers this year.

Under the 2012 Scotland Act, the Scottish Parliament will receive limited powers from April 2016 to vary the rate of income tax.

However, the deputy first minister told MSPs the powers only allowed changes to be applied equally across three income tax bands, preventing him from tailoring the system to help those on the lowest incomes.

Dugdale will tell an audience in Edinburgh this morning that, under Scottish Labour’s plans, the 1p rise from 2016-17 would be offset by taxpayers earning less than £20,000 receiving £100 each year through a payment scheme administered by local authorities.

“Given the choice between using our powers or making cuts to our children’s future, we choose to use our powers,” Dugdale will say.

“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 one pence 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.

“This choice we make today on the Scottish rate of income tax would provide a half a billion pounds more to invest in our children’s future. It enables us to stop cuts to schools and other vital public services, and to guarantee that spending on education will be protected in real terms in the next five years.”

According to Labour, more than 800,000 workers will not lose any money under the policy change, with those on the national minimum wage and living wage seeing an increase of £81 and £51 over the course of each year. A nurse on just over £25,000 would be left around £140 worse off .