Scots cashing in pensions will pay more tax under budget plans, says Tories
People who cash in their pension face paying more as a result of proposals in the Scottish Government's draft Budget, according to the Conservatives.
Anyone aged 55 or over can take out their full pension pot, with 75% of the cash taxed as income.
The Scottish Conservatives said the SNP administration's proposed income tax changes mean people in Scotland could face higher tax charges on the pension than elsewhere in the UK.
The party said someone drawing out a lump sum of £105,000 - the average pension pot for those aged 55-65 - would have to pay an extra £527.
A Scottish pensioner taking a lump sum of £50,000 would pay £115 more, the Tories said.
They said the proposals will damage economic confidence in Scotland, but Scottish ministers insist the new system will be fairer.
Scottish Conservative shadow finance secretary Murdo Fraser MSP said: `The Nat tax will hit Scots during their working life, and now we learn that it could hammer them when they retire too.
`This is a classic unintended consequence of tax rises and only goes to show that the SNP simply haven't thought through these half-baked plans.'
Finance Secretary Derek Mackay told Holyrood on Thursday that he had made Scotland the fairest taxed part of UK, as he introduced a five-band system of income tax that would leave those on a salary of £33,000 or above paying more.
He said the Scottish Government was freezing the basic rate at 20p, but introducing a new intermediate rate of 21p, which will kick in after £24,000.
The higher rate and additional rates are also being upped by 1p to 41p and 46p respectively - but Mr Mackay is offsetting increases for higher earners with the introduction of a `Scottish starter rate' of tax of 19p, which will apply to the first £2,000 of taxable income.
A Scottish Government spokesman said: `Our new, fairer income tax policy will protect the 70% of taxpayers - including pensioners - who earn less than £33,000 a year and ensure they pay less tax next year for any given income whilst asking those earning more than £33,000 to pay a proportionate amount more to support our public services.'
Unveiling the Scottish Government's 2018-19 draft Budget last week, Mr Mackay announced that councils will have an increase in 'core funding' of £94 million - adding that if authorities increase council tax charges by the maximum of 3%, this would raise a further £77 million.
The Greens have said they could not support the Budget as it stands because there is a 'real terms cut in the local government revenue budget', but could do so if an extra £150 million was allocated to councils.
Scottish Labour argues that local services will be effectively nearly £700 million worse off in the next financial year.
The Scottish Government spokesman responded: `The Scottish Government has continued to ensure that our partners in local government receive a fair funding settlement despite further cuts to the Scottish Budget from the UK Government.
`We have protected day-to-day local government spending, while increasing the capital budget.
`Local authorities will receive more than £10.5 billion through the local government finance settlement in 2018-19.'