SNP Highlands and Islands list MSP Maree Todd has hailed the Scottish Government’s draft budget as one which will “deliver a fairer society for the whole of Scotland, including our island communities”.
She said finance minister Derek Mackay’s decision to increase tax for high earners will mean a majority of workers will pay less than the rest of the UK.
But Conservative MSP for the Highlands and Islands Jamie Halcro Johnston said over a million people will be impacted by higher taxes – while the savings made by people on lower wages may be “written off many times over by increases to council tax”.
On Thursday afternoon Mackay announced a 1p in the pound income tax increase for people earning between £24,001 to £44,273.
The same increase will be applied to the higher and top tax bands, while a ‘starter rate’ of 19p will be put in place for the £2,000 earned after the £11,850 tax-free personal allowance.
The 20p basic rate will be maintained for people on a salary between £13,851 to £24,000.
It is the first time the Scottish Government has used new powers to change income tax and Todd said they have been used to “make our country fairer”.
“In a nutshell, the Scottish Government’s budget protects low and middle earners and delivers for public services and public sector workers,” she said.
“The budget delivers progressive reforms to Scotland’s income tax system, with modest increases on high earners while a majority of taxpayers will pay less than in the rest of the UK.
“This chimes with what people want in Scotland – polling has found that most Scots back an increase in income tax for those who can afford it. I have certainly received hundreds of emails from constituents over the last month or so, advocating for this.
“The Scottish Government is delivering lower income tax for the vast majority of Scots; people earning up to £33,000 will pay no more and many low and middle earners will pay less tax in Scotland than in any other part of the UK.”
But Halcro Johnston suggested that the benefit to lower income workers may be countered by Shetland Islands Council’s decision to increase council tax earlier in the year after being given the powers to do so by the government.
“This budget will be a disappointment for many,” he said.
“Over a million people will be impacted by higher taxes including the sort of skilled professionals we need to attract to the region. At the lower end, the maximum anyone can save is just £1.66 a month, which is likely to be written off many times over by increases to council tax.”
Mackay’s draft budget also announced a three per cent pay increase after years of freezes for public sector workers earning less than £30,000.
The increase will be two per cent for people making over £30,000, while a cap of £1,600 will be set for people earning more than £80,000.
Halcro Johnston suggested some of the money gained in the pay increase will be “clawed back” in higher income tax for workers.
“The SNP has cut funding to Shetland’s council yet again while expecting it to increase public sector pay,” he said.
“Public sector workers from primary school teachers to police officers will doubtless feel deceived when any increase in pay is being clawed back in higher taxes on their incomes.”
For Todd, however, the draft budget – which is due to be voted on in February and will see the SNP need support from at least one other party – should allow Scotland to cope with what is said to be a £200 million real terms cut in funding from Westminster.
“In the face of the challenges presented by a cut to Scottish Government funding, ongoing Tory austerity, and their extreme Brexit – this budget provides the investment we need to meet these challenges and seize the opportunities of tomorrow,” she said.
SIC leader Cecil Smith, meanwhile, said the local authority will have to find “several million pounds in savings” to balance its books next year after receiving another “significant cut” in funding from the Scottish Government.
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