Tax cuts for high earners could cost Scotland £1billion

Increasing the number of high earners being given a tax cut could cost Scotland around £1 billion over the next four years, according to a study.

Analysis by the Institute for Public Policy Research (IPPR) suggests doing so would cost up to £280m a year.

The Scottish Government introduced a 41% higher rate for people earning between £43,431 and #150,000 in April this year.

Ministers had suggested raising this threshold to be in line with the rate set by the UK Government in its 2018 budget, with 40% starting at #50,000.

Scottish Conservative deputy leader Murdo Fraser claimed raising taxes on higher earners has a negative economic impact.

He said: "Taxpayers across Scotland will have a very simple question about all this - if workers in every other part of the UK can benefit from a tax break, why can't they?''

"What this research doesn't address is how hiking taxes drives away wealth and investment, all of which is bad for the economy in the short, medium and long-term.''

Scottish Labour finance spokesman James Kelly MSP said increasing taxes on higher earners could raise investment for public services.

"Labour want to see a Scottish budget where the richest pay their fair share to properly fund public services and tackle inequality,'' he said.

"The SNP has taken Tory austerity and quadrupled it for local lifeline services, while Theresa May's government has clearly broken its promise to end austerity.

"Income tax is devolved and, as this important report makes clear, raising the higher-rate threshold should not be a priority for the Scottish Government.

"Scotland needs a progressive tax system that meets the needs of communities across the country.''

Scottish Greens co-convener Patrick Harvie MSP, said there must also be consideration given to the funding given to local government.

"There is of course no case for copying the UK's tax policies, which promote inequality and strip public services of the vital funds they need'', he said.

"We should continue the journey towards a fairer tax system and a budget that invests for the transition to a sustainable economy, protects public services and makes society more equal.

"Since the greatest pressure is being felt at local level, and local government is far too over-dependent on block funding from central government, we have made local tax reform our first priority.

"Only if the Scottish Government shows willingness to make progress on that agenda will we sit down to talks about the budget itself.''

A Scottish Government spokesman said: "Decisions on next year's Scottish income tax rates and bands will be announced in the budget in December.

"We have shown to date however, that we have taken responsible decisions to ensure Scottish tax is progressive and raises revenue needed to support public services and our economy."