Kezia Dugdale, the Leader of Labour in Scotland, has called for an increase in income tax of 1p to raise an additional £500 million in revenue. The Scottish Parliament will have the power to control its own tax rate for the first time in April 2016 with a more substantial transfer of power later on.
“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 1p 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”.
The Labour proposals also include the payment of £100 to those earning under £20,000 to ensure that they are not made worse off.
John Swinney, the SNP Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, said:
“Around 40 per cent of the adult Scottish population don’t earn enough to pay any income tax, and the lowest paid would actually lose out, because anyone earning less than £11,000 – mostly women in part-time work – can still pay National Insurance but would not benefit from the proposed £100 rebate. In addition, these proposals would create an unfair distortion in the system as someone earning just under £11,000 wouldn’t get the £100 hand-out while someone earning £11,000 would. Labour’s plans for administering the £100 rebate appear to be uncosted but would clearly run into the tens of millions of pounds”.
The SNP have said that they will consider changing tax rates and bands but only when the enhanced financial powers are delegated to the Scottish Parliament, which isn’t expected until at least 2017.
The Scottish Liberal Democrats have also said that they would increase income tax by 1p which would be spent entirely on education. Willie Rennie, the Scottish Liberal Democrat leader, said that “this would be the biggest investment in education since devolution”.