Swinney to outline Scottish budget plans for 2016/17
No change in Scottish income tax rate
(about 1 hour later)
The finance secretary John Swinney is expected to rule out an increase in Scottish income tax next year, when Holyrood gets new financial powers.
The finance secretary John Swinney has ruled out an increase in Scottish income tax when Holyrood gets new financial powers next year.
The announcement will form part of his detailed spending plans for the year ahead, due to be disclosed to MSPs.
Mr Swinney made the announcement as he unveiled his draft budget to MSPs in the Scottish Parliament.
It is thought that his spending priorities will be childcare, the NHS, schools and the police.
He also announced a tax rise on many second homes and buy-to-let properties.
Mr Swinney has warned that Scotland faces "tough choices" in the light of overall Treasury spending constraint.
Mr Swinney warned that the Scottish budget was set to continue to reduce in real terms until the end of the decade, as he said it had done since 2010.
Full live coverage of his statement will be available on the BBC's Holyrood Live page from 14:40.
Holyrood will be given limited powers over income tax rates next April under the 2012 Scotland Act, which was passed under the previous UK coalition government.
It will see the Treasury deduct from the Scottish block grant a sum equivalent to the product of 10p worth of income tax north of the border.
Mr Swinney then had the option of setting a Scottish Rate of Income Tax (SRIT) which could either be lower, higher or the same as the 10p that has been deducted.
The finance secretary told the Holyrood chamber: "I propose that the Scottish Rate of Income Tax will be set at 10p in the pound - the rate people pay this year will be the same rate that they will pay next year.
"I hope that from 2017/18 this parliament will have more flexibility in setting income tax rates. However, that will depend on reaching agreement on a new fiscal framework and final passage of the Scotland Bill."
Among the other measures proposed by Mr Swinney were:
Greater controls over income tax are among the measures contained in the Scotland Bill which is currently being scrutinised by Westminster, but these will not come into force until 2017 at the earliest.
Mr Swinney said that the Scottish government aimed to set out its longer-term plans on income tax ahead of the dissolution of the Scottish Parliament in March of next year.
The draft budget is normally presented in September, but it was delayed this year to take into account the Westminster spending review in November.
The draft budget is normally presented in September, but it was delayed this year to take into account the Westminster spending review in November.
The new tax powers available to Mr Swinney are those featured in the 2012 Scotland Act, which was carried under the previous UK coalition Government.
Further powers proposed by the Smith Commission are currently under scrutiny at Westminster, but those will not come into force until 2017 at the earliest.
Tax powers
Under the 2012 law, Holyrood will gain a new power over income tax from April 2016.
Under that plan, the Treasury will deduct from the Scottish block grant a sum equivalent to the product of 10p worth of income tax north of the Border.
MSPs then have to set a Scottish Rate of Income Tax (SRIT) to fill the gap.
They can levy more, to raise more cash; they can cut tax, at both the standard and upper rates, and take the hit on public spending; or they can reinstate the 10p rate.
It is understood that Mr Swinney will opt for the 10p rate. Government strategists will be keen to emphasise that a 10p Scottish rate of income tax adds up to no change overall; that the tax bills faced by individuals will not change.
Mr Swinney has already signalled that he prefers a "progressive" approach to tax, which would involve levying more from upper earners.
The 2012 Act does not contain any power to focus on upper earners only.
That is likely to be possible under the new package of powers being considered by Westminster.
Impending election
Holyrood goes to the polls in May next year.
It is thought unlikely that the Finance Secretary will opt for a tax hike just before voters cast their choice.
A tax cut is believed to be ruled out on the grounds that there is already pressure upon budgets.
UK Ministers insist that the settlement available to Scotland is fair - in that there is a significant increase in capital spending and an increase in day-to-day spending in cash terms.
Mr Swinney says the increase in capital spending barely compensates for previous cuts and that, in real terms, current expenditure is facing big reductions.
Budget priorities
by Brian Taylor, BBC Scotland political editor
The finance secretary is under pressure from Labour to mitigate austerity afflicting those who are less well off.
It is thought he will argue that the best way to help the poor is to ensure that they are included in efforts to grow the economy while emphasising his desire to mitigate, where possible, the impact of welfare cuts.
It is also expected that Mr Swinney will argue that there must be "relentless reform" in the public sector to gain the best value for money, and to ensure that services are best directed to assist the public. In which regard, ministers stress their plan to integrate health and social care.
So the NHS will be protected - but with a requirement to change. The First Minister Nicola Sturgeon has already emphasised the key role of education in building the economy - so schools can expect cash, particularly to enhance and broaden attainment.
Terror threats have added to the need to protect the police budget, and it is thought Mr Swinney will respond to that. And Ministers have already promised a substantial boost to child care, doubling the hours available to families.
In terms of spending curbs, it seems likely that the wider local authority budget may be vulnerable; council tax is expected to be frozen again, and it represents a significant proportion of overall spending.
