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Scotland should create new income tax band, says Conservative commission Scotland should create new income tax band, says Conservative commission
(about 3 hours later)
Scotland should create a new middle income tax band after greater powers are devolved to Holyrood next year, a commission set up by the Scottish Conservatives has suggested.Scotland should create a new middle income tax band after greater powers are devolved to Holyrood next year, a commission set up by the Scottish Conservatives has suggested.
The commission said the move would prevent many "aspirational families" being drawn into the higher tax rate.The commission said the move would prevent many "aspirational families" being drawn into the higher tax rate.
It suggested the new rate should be between the current 20% and 40% bands.It suggested the new rate should be between the current 20% and 40% bands.
Its report also said taxes in Scotland should be lower than the rest of the UK "when affordable".Its report also said taxes in Scotland should be lower than the rest of the UK "when affordable".
And it called for the council tax to be reformed to make it fairer.And it called for the council tax to be reformed to make it fairer.
'Wealth creators''Wealth creators'
The commission was headed by former CBI Scotland head Sir Iain McMillan, and was tasked with looking at how the Scottish Parliament could use new and existing powers to boost economic growth.The commission was headed by former CBI Scotland head Sir Iain McMillan, and was tasked with looking at how the Scottish Parliament could use new and existing powers to boost economic growth.
Its report recommended that the new "middle band" of income tax should be set at about 30%, and warned politicians against raising the upper rate of tax, which it said could "drive out wealth creators".Its report recommended that the new "middle band" of income tax should be set at about 30%, and warned politicians against raising the upper rate of tax, which it said could "drive out wealth creators".
The SNP said it favoured introducing a "more progressive" income tax regime when the Scottish Parliament is given greater flexibility in setting income tax rates from next year.The SNP said it favoured introducing a "more progressive" income tax regime when the Scottish Parliament is given greater flexibility in setting income tax rates from next year.
Scottish Labour has a firm commitment to raising the top rate from 45% to 50%, with the party saying the additional revenue would go towards tackling education inequality.Scottish Labour has a firm commitment to raising the top rate from 45% to 50%, with the party saying the additional revenue would go towards tackling education inequality.
The Scottish Conservatives hope the issue of tax will help put clear water between itself and the other parties as they aim to replace Labour as the main opposition in the Scottish Parliament when voters go to the polls on 5 May.The Scottish Conservatives hope the issue of tax will help put clear water between itself and the other parties as they aim to replace Labour as the main opposition in the Scottish Parliament when voters go to the polls on 5 May.
'Competitive edge''Competitive edge'
The commission's report said that the "significant" new tax powers coming to the Scottish Parliament next year presented both "risks and opportunities" to the country.The commission's report said that the "significant" new tax powers coming to the Scottish Parliament next year presented both "risks and opportunities" to the country.
Its key recommendations included:Its key recommendations included:
Writing in the foreword to the report, Sir Iain said the Scottish Parliament had so far been largely "sheltered" by the Barnett Formula from the "tough political decisions that are necessary to balance the imposition of taxes on Scottish taxpayers on the one hand with public spending on the electorate's behalf on the other".Writing in the foreword to the report, Sir Iain said the Scottish Parliament had so far been largely "sheltered" by the Barnett Formula from the "tough political decisions that are necessary to balance the imposition of taxes on Scottish taxpayers on the one hand with public spending on the electorate's behalf on the other".
He added: "These days will come to an end in April 2017. From now on the debate in Scotland needs to include tax as well as matters concerned with spending."He added: "These days will come to an end in April 2017. From now on the debate in Scotland needs to include tax as well as matters concerned with spending."
Sir Iain said he hoped the report would "stimulate a rigorous debate on Scotland's international competitiveness and the contribution that competitive and fair taxes can make to improving Scotland's economy."Sir Iain said he hoped the report would "stimulate a rigorous debate on Scotland's international competitiveness and the contribution that competitive and fair taxes can make to improving Scotland's economy."
'Open for business' Analysis by Brian Taylor, BBC Scotland political editor
For now, Ruth Davidson says she agrees with the underlying thinking - that Scotland already faces disadvantages such as remoteness from big markets and should not add to those with higher tax. For detail, we will have to hold fire for now.
The Liberal Democrats will similarly set out their thinking although Willie Rennie has talked of the need to invest in education. The Greens say improved public services in Scotland cannot be funded without higher impositions, potentially affecting both income tax and council tax.
Labour has set out some early thinking, including a restored 50p upper rate for those earning more than £150,000 a year.
The SNP are looking at that but I hear one or two concerned questions behind the scenes. Would such a tax raise significant sums? What if, within a continuing UK, top earners registered elsewhere to sidestep the Scottish rate? What signal does it send about Scotland being open for business?
It is a conundrum for the SNP. As the governing party - and quite possibly the continuing governing party - they want nothing that jeopardises the economy of Scotland, particularly as future public services will be more dependent than ever on the buoyancy of that economy, given the new tax powers.
Equally, though, they want to match - more than match - the anti-austerity, pro-public services rhetoric of their Labour opponents.
Read more from Brian
Scottish Conservative leader Ruth Davidson said the party would examine the commission's recommendations before setting out its plans ahead of the election.Scottish Conservative leader Ruth Davidson said the party would examine the commission's recommendations before setting out its plans ahead of the election.
She added: "The commission's central recommendation is that the tax burden should be no higher in Scotland than in the rest of the UK, and lower when affordable - and I back that 100%.She added: "The commission's central recommendation is that the tax burden should be no higher in Scotland than in the rest of the UK, and lower when affordable - and I back that 100%.
"We need to show that Scotland is open for business, so I and my team will do everything we can to ensure that the SNP does not use the new tax powers to take more money from the paypackets of hardworking Scots.""We need to show that Scotland is open for business, so I and my team will do everything we can to ensure that the SNP does not use the new tax powers to take more money from the paypackets of hardworking Scots."
The committee's other members were business journalist Bill Jamieson, former PwC tax partner Rhona Irving, former Scottish Enterprise chief Jack Perry, ex-Barr Ltd chairman Anthony Rush, economist Dr Andrew Lilico and former UK government special adviser Paul Sinclair.The committee's other members were business journalist Bill Jamieson, former PwC tax partner Rhona Irving, former Scottish Enterprise chief Jack Perry, ex-Barr Ltd chairman Anthony Rush, economist Dr Andrew Lilico and former UK government special adviser Paul Sinclair.
Responding to the report, Scottish Lib Dem leader Willie Rennie said: "The Tories haven't really changed. They still favour tax cuts for the better off no matter what the consequences.Responding to the report, Scottish Lib Dem leader Willie Rennie said: "The Tories haven't really changed. They still favour tax cuts for the better off no matter what the consequences.
"Their plans on spending will have a devastating effect on education, the NHS, the police and other public services.""Their plans on spending will have a devastating effect on education, the NHS, the police and other public services."
SNP MSP Kenneth Gibson said: "It is hugely hypocritical of the Tories to try to position themselves as being against tax rises - when the reality is they want to hike household bills by reintroducing taxes on the sick and on higher education, and a Tory council wants to hike council tax by an eye-watering 18%."