Scottish First Minister and Scottish National Party (SNP) leader Nicola Sturgeon has said that Scotland will not adopt the UK Government’s plans to increase the starting point at which workers pay the 40p tax rate, if her party wins the Holyrood election on 5 May.
In April 2017, the Scottish Parliament will receive new powers to set bands and rates which will apply to Scotland alone. Amongst other things, this would allow the Scottish Government to diverge from the plans announced in Chancellor George Osborne’s Budget to increase the threshold for 40p taxpayers to £45,000 in 2017.
Of the four main parties in Scotland, the SNP, Scottish Labour and the Liberal Democrats all oppose the threshold increase, with only the Scottish Conservatives in favour.
However, although Ms Sturgeon clearly stated that she would reject the Chancellor’s plans, she did say that the 40p threshold would still rise by the Consumer Price Index (CPI) inflation rate, taking it from £43,000 to £43,387.
She said: ‘By adopting a different path to the UK Government we could generate more than £1 billion of additional revenues, enabling us to protect the public services we all rely on. We believe that this proposal is reasonable, it is balanced and it is fair.’
The SNP is not proposing to increase the basic rate, the higher rate or the additional rate (for those earning £150,000 or more) from their current rates of 20p, 40p or 45p in the next Parliament. The party also plans to set a zero tax rate, which will mean that, by 2021/22, no one pays tax on the first £12,750 of their income.