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No change in Scottish income tax rate Scottish budget: No change in Scottish income tax rate
(35 minutes later)
The finance secretary John Swinney has ruled out an increase in Scottish income tax when Holyrood gets new financial powers next year.The finance secretary John Swinney has ruled out an increase in Scottish income tax when Holyrood gets new financial powers next year.
Mr Swinney made the announcement as he unveiled his draft budget to MSPs in the Scottish Parliament.Mr Swinney made the announcement as he unveiled his draft budget to MSPs in the Scottish Parliament.
He also announced a tax rise on many second homes and buy-to-let properties. He also announced a tax rise on many second homes and buy-to-let properties through a Land and Buildings Transaction Tax levy
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. And Mr Swinney confirmed that the council tax freeze would continue.
The finance secretary 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.
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.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.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.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.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.""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: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.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.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. He said that the Scottish government's aim was to focus on tackling inequality and boosting productivity in order to "create the foundations for a stronger and more inclusive economy".
But he said that would need to be delivered within a "significantly constrained" public spending environment.
Second homes
Mr Swinney added: "By 2020 our budget will be 12.5% lower in real terms than when the Conservatives came to power. That is the equivalent of one pound in every eight that we spend being cut by Westminster by 2020."
He said that Land and Buildings Transaction tax, which replaced the stamp duty charge on property sales in Scotland, will remain the same for most transactions.
But he added: "The exception to this is for buyers purchasing an additional residential property - such as a second home or a buy-to-let - worth more than £40,000, who will face an addition charge of 3% of the value.
Mr Swinney said this was "proportionate and fair", adding the new levy "seeks to ensure that the opportunities for first-time buyers to enter the housing market in Scotland remain as strong as they possibly can be".
The draft budget is normally presented in September, but was delayed this year to take into account the Westminster spending review in November.