John Swinney said the Scottish Government would “consider” Westminster’s mini-budget when drawing up its fiscal plans for next year and hinted Scotland may be forced to raise income tax or further cut public spending to cover falling revenues because of Holyrood’s relative lack of wriggle room.
In a statement released following the Chancellor’s statement, the Deputy First Minister said that soaring inflation had wiped off £1.7 billion from the Scottish budget, adding: “With a fixed budget and no scope to borrow for short-term challenges, Scotland is at the mercy of UK decisions. This reinforces the urgent need for independence.”
He said the Scottish Government would set out its policy on income tax at the next budget.
The Scottish Tories are calling on the SNP/Greens administration to follow suit on cutting income tax north of the Border.
The highest rate of tax has been abolished entirely in England, meaning those on more than £150,000 per year have gone from paying 45% to just 40% on earnings.
It is unlikely the SNP will mirror the move, with First Minister Nicola Sturgeon saying the mini-budget unveiled on Friday would have the “super-wealthy laughing all the way to the actual bank”.
Scots will pay higher taxes than people in England
The Chartered Institute of Taxation (CIOT) has crunched the numbers and found the changes will mean that someone in Scotland earning £27,850, who would previously have paid the same as if they were in England, will now pay £152.80 more per year in tax.
Those on £300,000 will now pay £7877 more than their English neighbours with the difference rising to £54,045 extra per year in Scotland than in England for those earning more than £1 million.
Sean Cockburn, chair of the CIOT’s Scottish technical committee, said: “As things stand, from next year, Scottish ministers will be unable to say that some Scots face lower tax bills compared to the rest of the UK.”
Swinney, who is standing in for Kate Forbes while she is on maternity leave, said the measures were “cold comfort to the millions of people across Scotland” struggling to make ends meet.
He said hard-up families have been “looking for the UK Government to use their reserved powers to provide support for those that need it most”.
“Instead we get tax cuts for the rich and nothing for those who need it most,” he added.
'Thatcherism on steroids'
Scottish Labour have branded the plans “economically illiterate and morally bankrupt”. Leader Anas Sarwar said: “They have lifted the cap on bankers’ bonuses, given a tax cut to those at the very top, and delivered a windfall instead of a windfall tax for the energy giants making record profits – all while letting energy prices almost double and working people struggle to make ends meet.”
She added: “This is one of the wealthiest societies in the world, yet hundreds of thousands of people are being plunged into poverty.
“We are approaching winter and, all across the country, families are being forced to choose between starving and freezing. It is the politics of shareholders, bankers and the super-rich.”
The Scottish Trade Union Congress’ general secretary Roz Foyer said the announcement was a “bludgeoning” of the worst-off in society.
She added: “This is no longer austerity. This is Thatcherism on steroids. An acceleration of free-market, trickle-down economics that deepens inequality and embeds social injustice throughout the country.
“We cannot sit idle whilst those in Westminster reward the workers of Canary Wharf over the Calton. Workers are in for the fight of their lives against a government that doesn’t care for them nor represent them. It’s a fight we intend on winning.”