Unveiling Scotland’s budget for the 2023-24 tax year, Scotland’s deputy first minister John Swinney has announced that the two highest rates of income tax will be raised by one penny in the pound.
The higher tax rate, starting on earnings in excess of £43,662 per year, will go up from 41 pence in the pound to 42 pence.
The top rate of tax has also been increased from 46 pence in every pound to 47 pence, and the payment threshold lowered.
The highest rate of income tax in Scotland currently applies to earnings of over £150,000 but will now count for any earnings over £125,140.
Elsewhere, the basic rate of income tax remains unaltered, after Scottish first minister Nicola Sturgeon had previously spoken out against adjusting it.
Other changes include an increase in the amount of second homes tax within wider Land and Buildings Transaction Tax, which goes from four per cent to six per cent.
An additional £550 million has been set aside for local authorities, who have also been given new powers to set their own council tax rates. Investment in the health and social care sector will be upped by a staggering £1 billion.
Meanwhile, benefits have been increased in line with the 10.1 per cent September 2022 rate of inflation and the Scottish Child Payment has been kept at £25 per child, per week.
Another move has seen £20 million that had been ringfenced for a second referendum on Scottish independence put towards a fuel poverty hardship fund. This decision comes after the Supreme Court recently ruled that Holyrood cannot stage a referendum without consent from Westminster.
In a delayed budget speech, Swinney said that all the changes would raise an additional £553 million in tax revenue and “enable spending on patient care in our National Health Service”.
He insisted that the tax hikes would ensure that everyone “pays their fair share” to help “create a fairer society”.
The deputy first minister also took aim at the UK government during his address, declaring that Westminster had “compounded” what was already the “most turbulent economic and financial context most people can remember”.
Swinney said: “War is taking place in Europe, leading to the suffering and displacement of millions of Ukrainians. As a result of the conflict, energy and fuel prices are surging. Inflation is now corroding our economy having reached a 40-year high.
“If these challenges - faced by countries around the globe - were not enough, the UK has added to the turmoil by a disastrous approach to Brexit which has damaged labour supply through the loss of free movement of people and undermined frictionless trade with our nearest markets.
“All of these difficulties have been compounded by the utterly catastrophic decisions of the UK government in the September mini-budget, which have driven increases in interest rates and saddled the country with much higher debt, undermining the public finances for generations to come.”
The timing of the budget speech was pushed back by half an hour after details of the plans to raise taxes were reported by the BBC before Swinney made his statement.
The delay was ordered by presiding officer Alison Johnstone, to enable a swift investigation into how the plans leaked.
Both Swinney and Sturgeon offered “categoric assurances” to Johnstone that the Scottish government had not disclosed the information prior to the speech.
In the aftermath of the budget speech, the Scottish government faced criticism from the opposition benches.
The Scottish Conservatives raised concerns that the differentials in tax for higher earners in Scotland made the country a less attractive part of the UK to live and invest and could hamper economic growth.
The party’s finance spokesperson Liz Smith also accused Swinney of “blaming the UK government for every single predicament”.
