Scotland should create a new income tax band after greater powers are devolved from Westminster in 2017, according to a commission set up by the Scottish Conservative Party.
Its report suggests that the new rate should be between the current 20% and 40% bands to prevent many “aspirational families” being drawn into the higher tax rate. It also says that taxes in Scotland should be lower than the rest of the UK “when affordable” and that business rates should be frozen for the course of the next Scottish Parliament to offset the 42% increase since 2007.
The commission was led by former CBI Scotland (news.cbi.org.uk) head Sir Iain McMillan, and it was tasked with looking at how the Scottish Parliament could use new and existing powers to boost economic growth. Its report concludes that politicians should not raise the upper rate of tax, because that could “drive out wealth creators”.
In the foreword to the report, Sir Iain says that the Scottish Parliament has been “largely sheltered by the Barnett Formula from the tough political decisions that are necessary to balance the imposition of taxes on Scottish taxpayers on the one hand with public spending on the electorate’s behalf on the other. That will come to an end in April 2017, so the debate in Scotland needs to include tax as well as matters concerned with spending.”
The SNP favours introducing a “more progressive” income tax regime, while Scottish Labour is committed to raising
the top rate from 45% to 50%, saying that the additional revenues would go towards tackling “education inequality”.