Scotland’s deputy first minister and interim finance secretary John Swinney will unveil Scotland’s budget on Thursday afternoon, which will outline tax and spending plans for the 2023-24 tax year.
Political commentators expect tax measures to target higher earners as Swinney vowed to take “decisive action” to alleviate cost-of-living pressures on households.
Swinney said that Holyrood would exercise its powers on tax to the “maximum extent that is responsible” and warned that “difficult decisions” lay ahead.
The Scottish government is likely to face backlash in the wake of its decisions, after the SNP promised not to raise income taxes in its manifesto ahead of last year’s Holyrood election.
Measures that Scottish ministers could take may involve mirroring the UK government and lowering the threshold for the highest band of income tax in Scotland. Currently, the highest earners start paying 46 per cent tax on incomes in excess of £150,000.
In the Autumn Statement, chancellor Jeremy Hunt reduced the threshold for the top rate of income tax in England, Wales and Northern Ireland to £125,000.
Reports have also emerged suggesting that Swinney could raise the top two tax rates, but the basic rate paid by lower earners is likely to remain unaffected with first minister Nicola Sturgeon having spoken out against raising tax for all.
The 41 per cent higher tax rate in Scotland begins at £43,663, compared to £50,271 across the rest of the UK.
Ahead of the budget, the Scottish Tories’ finance spokesperson Liz Smith warned that the “differential between Scotland and the rest of the UK” in terms of tax needed to be such to maintain Scotland’s place as “an attractive place to work and invest.”
Scottish Labour has suggested that the government could improve its efficiency by reducing its headcount of internal advisors to free up more revenue, while the Lib Dems ahead of the budget speech have urged ministers to set aside more funding for energy efficiency measures such as insulation, and the social care sector.
While there are likely to be cuts to public spending in Scottish government departments, Swinney insisted that the plans would continue to deliver sustainable public services, create opportunity and make Scotland “fairer” and “more equal”.
Alongside creating sustainable public services, Swinney has said that the budget will prioritise the transition to a net-zero economy and cracking down on child poverty, as part of a wider “change in the way we manage public spending” to render public finances “more sustainable and resilient”.
The BBC reports that much of the additional funding for the Scottish government’s budget provided by Westminster has been set aside for health spending, which renders real-terms cuts in other departments more likely.
Part of Holyrood’s healthcare plans includes the foundation of a National Care Service, which is forecast cost between £664 million and £1.26 billion over the next five years.
The Scottish government has also committed £20 million toward its independence push in the 2023-24 financial year, a move which is likely to face opposition scrutiny.
Image by Scottish Government on Wikimedia Commons
