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Scottish Rate Resolution

Part of the debate – in the Scottish Parliament on 4th March 2020.

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Photo of Ben Macpherson Ben Macpherson Scottish National Party

I point out to Murdo Fraser that, as he mentioned, without our approach there would be £46 million less to spend on key public services such as health, education, justice and local government, all of which are important for the delivery of public services on the ground and meet some of the requests that the Scottish Conservatives made in the budget process.

I am asking the Scottish Parliament to agree to the motion on the Scottish rate resolution, which, for the 2020-21 tax year, will raise funds for the Scottish budget to deliver the widest range of free-to-access public services in the UK. Those initiatives, such as concessionary travel for older and disabled persons as well as—following our budget deal with the Scottish Greens—for under-19s, will promote inclusion and provide support. Importantly, the funds will also help us to progress towards our ambitious targets on addressing child poverty through initiatives such as the Scottish child payment.

Tax is not set in isolation: we have guaranteed a 3 per cent basic pay increase for all public sector workers who earn up to £80,000. That means that, as a result of our income tax and pay policy choices for 2020-21, a senior nurse will be around £890 better off and a teacher will be around £950 better off in 2020-21 compared to this year.

Under the Scottish Government’s proposals, there will be no increase in the tax divergence relative to the rest of the UK as long as the UK Government sticks to the commitments that it made in its 2018 budget. In 2018, the UK Government committed to freezing the higher-rate tax threshold in the rest of the UK at £50,000 in 2020-21. The Scottish Conservatives asked us not to create more divergence, and our proposals will ensure that. Divergence will increase only if the Conservative UK Government decides to deliver a tax cut for higher earners once again. What is more, regardless of what the UK Government does, the benefits of having access to the wider set of free public services in Scotland outweigh any income tax differential with the rest of the UK.

Under the plans that we are putting before the Parliament today, Scotland will continue to be the lowest-taxed part of the UK for the majority of income tax payers for the third consecutive year. We have continued to deliver a Scottish tax system that offers convenience, fairness, efficiency and certainty for Scottish taxpayers and for the Scottish people. Our decisions on taxation have resulted in a more progressive tax system that protects low and middle-income taxpayers while raising additional revenue to invest in public services and Scotland’s economy.

I present a motion on a Scottish rate resolution that will deliver a fair and progressive tax system and raise £12 billion for the Scottish budget to protect and enhance our vital public services and support our economy—that is £12 billion towards increasing wellbeing, tackling climate change, reducing child poverty and increasing sustainable and inclusive economic growth.

I move,

That the Parliament agrees that, for the purposes of section 11A of the Income Tax Act 2007 (which provides for income tax to be charged at Scottish rates on certain non-savings and non-dividend income of a Scottish taxpayer), the Scottish rates and limits for the tax year 2020-21 are as follows—

(a) a starter rate of 19%, charged on income up to a limit of £2,085,

(b) the Scottish basic rate is 20%, charged on income above £2,085 and up to a limit of £12,658,

(c) an intermediate rate of 21%, charged on income above £12,658 and up to a limit of £30,930,

(d) a higher rate of 41%, charged on income above £30,930 and up to a limit of £150,000, and

(e) a top rate of 46%, charged on income above £150,000.