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Income Tax

Part of the debate – in the Scottish Parliament on 25th June 2019.

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Photo of Derek Mackay Derek Mackay Scottish National Party

The member raises a number of issues. Scotland’s economy is performing well: it has record low unemployment, record high employment and a strong performance on productivity, exports and a number of other economic indicators.

There might be cyclical or distributional issues when it comes to income tax growth. I have explored thoroughly with the Finance and Constitution Committee the fact that there might well be deepening inequality in the rest of the UK, where more higher-rate taxpayers’ increases are going further, and that might well have a negative net impact on Scotland’s income tax rates because of the arrangements in the fiscal framework. However, our economy is growing strongly. If we want to support that on-going economic growth, we need to avert Brexit, because it would have a damaging impact on the whole of the UK, not just Scotland. We want to have a sustainable growth agenda.

I point out that the benefit of having a devolved income tax system is that we can make decisions for ourselves. For example, we have decided to have a more progressive income tax system, in which 55 per cent of Scottish taxpayers pay less than they would have done if they lived south of the border. Those 55 per cent of taxpayers are at the lower end of the income distribution rather than the top end, whereas it is those at the top end to whom the Conservatives seem to want to pander.