SNP hits middle and high earners with triple tax hike

Shona Robison has increased Scotland’s top tax rate, imposed a £307m stealth tax and introduced a new 45p band on salaries above £75,000

Source - Daily Telegraph - 19/12/23

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Scotland’s middle classes are to be forced to pay hundreds of pounds more income tax next year after Humza Yousaf’s government imposed a triple increase during the cost of living crisis.

Shona Robison, the SNP finance secretary, used the Scottish Budget to announce a new 45p “advanced” tax rate for higher earners, to be applied to income between £75,000 and £125,140 from next April.

Ms Robison also increased the top rate of tax in Scotland by 1p to 48p, applying to all income over £125,140. That is 3p in the pound higher than the top rate south of the border.

In addition, she imposed a £307 million stealth tax by freezing the salary threshold for the 42p higher rate at £43,663, rather than increasing it by inflation.

The move will affect middle-income workers like teachers, police officers and NHS staff through “fiscal drag” when they get their annual pay rises. Those already earning more than £43,663 will also see their tax bills increase.

The increases also mean the cross border tax gap between Scotland and England widens further. Anyone in Scotland earning more than £27,850 pays more income tax than if they lived south of the border. Those earning a £50,000 salary pay almost £1,500 per year extra.

For thousands of Scots, it will wipe out the impact of the Chancellor’s decision to cut National Insurance from Jan 6. They were expected to benefit by an average of £340 when the main rate is reduced from 12 per cent to 10 per cent across the UK.

In a statement to the Scottish Parliament, Ms Robison argued that the rises were necessary to help plug a £1.5 billion financial black hole in the SNP’s spending plans for 2024/25.

But economists have warned that the new tax band will generate only around £40 million, with revenue being vastly reduced thanks to behavioural change from higher earners.

This could involve them refusing promotions, working shorter hours or getting paid with dividends, which are taxed at a lower rate by the UK Government.

Rishi Sunak warned Mr Yousaf on Monday that increasing income tax again damages the UK Government’s efforts to help families and businesses through the cost of living crisis, arguing that “we should be cutting taxes, not raising them”.