Politics

MSPs agree a freeze in income tax rates amid warning ‘68,000 will pay more’

MSPS have agreed to freeze income tax rates for the next financial year despite worries that almost 70,000 Scots will pay more due to adjustments to bands.

SNP Public Finance Minister Tom Arthur said the “the majority of Scottish taxpayers will pay less income tax than they would elsewhere in the UK for the fifth consecutive year”.

Under the plans, agreed before the budget is finally approved, there will be no change to rates of income tax in the 2022/23 financial year.

The starter and basic rate bands will increase in line with inflation while the higher and top rate thresholds will remain frozen in cash terms.

Mr Arthur said his Government recognised the “vital and dynamic role” tax will play in a vision to “build a fairer, greener and more prosperous Scotland”.

He said: “The key message from stakeholders was the need for certainty and stability in the tax system.

“At a time when living costs are rising, taxpayers in the lower income brackets should not pay more tax. That is why we have proposed no change to rates of income tax in 2022/23.”

According to the Scottish Fiscal Commission, freezing rates will raise an additional £106m for the public purse.

The minister told MSPs that income tax makes up “30 per cent of the Scottish budget” and highlighted a UK Government is in “chaos” and “presiding over the most severe cost of living crisis for a generation”.

Scottish Conservative finance spokesperson, Liz Smith, warned that the adjustment of bands will force “68,000 people into paying more tax”.

She added: “We believe that we need to be extremely careful about any policy that will lead to some divergence.

“There are serious issues about the amount of revenue that we are effectively not getting in because o the policies of the current Scottish Government.”

Scottish Labour’s Daniel Johnson, welcomed the move to freeze income tax rates but called on SNP ministers to consider the use of “other tax powers” that have been devolved.

He said: “I think the Scottish Government are correct to essentially leave the rates unchanged and to raise thresholds in line with inflation.

“At a time when seeking to both build recovery and also alleviate economic damage, I think it would be wrong to increase levels of taxation.”

The Labour finance spokesperson said the strategy was in “sharp contrast” to the UK Government, which is pressing ahead with plans to increase National Insurance contributions to pay for health and social care improvements.

Mr Johnson said: “While I broadly support their progressive approach, I would point out that not every impact of the levels is progressive nor do they go as far as they could.”

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