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Nicola Sturgeon to set out Scottish tax plans SNP will not adopt UK Chancellor's 40p tax threshold change
(about 13 hours later)
The SNP is to set out its income tax plans ahead of the Holyrood election. The SNP has said it would not adopt UK government plans to raise the starting point at which workers in Scotland pay the 40p tax rate.
UK Chancellor George Osborne announced last week that he was to raise the threshold for the 40p rate of income tax - effectively giving a tax cut to higher earners. Leader Nicola Sturgeon, who is also the country's first minister, said she believed the move was wrong.
SNP leader Nicola Sturgeon, who is also Scotland's first minister, has said the move was the "wrong choice". She said that if her party won the 5 May election then "no taxpayer" would see their income tax bill rise.
She will spell out her party's proposals alongside Finance Secretary John Swinney in Glasgow. In April 2017, Holyrood will receive new powers to set bands and rates which apply to Scotland alone.
The Scottish Parliament already has limited powers over income tax - with greater flexibility over rates and bands due to be devolved under the Scotland Bill in April next year. That will allow the Scottish government not to follow Chancellor George Osborne's plans, announced in his Budget last week, to increase the threshold for 40p tax payers to £45,000 next year.
The Scotland Bill will also devolve greater control over areas such as VAT revenues, air passenger duty and welfare policy. Ms Sturgeon made clear that although she was rejecting the UK's plan, the 40p threshold would still rise by the CPI inflation rate, taking it from £43,000 to £43,387.
Scottish Labour and the Scottish Liberal Democrats have proposed using the existing powers to immediately increase the Scottish rate of income tax by 1p across all bands in order to raise £475m for education and other local services. She said: "That increase will prevent higher rate taxpayers from receiving a real terms cut in their tax bills, but nor will they see their bills increase."
Labour has also proposed a freeze on the 40p threshold throughout the next parliament, and wants to restore the 50p income tax rate for those earning more than £150,000. In addition, the SNP is not proposing to increase the additional rate - for those earning £150,000 or more - from its current 45p level.
Scottish Labour leader, Kezia Dugdale, is to outline her party's plans for changes to local government taxation ahead of the SNP event. The party's plan also includes:
The Liberal Democrats have outlined proposals for a brand new zero-rate band of income tax in order to take more low income people out of paying tax. Ms Sturgeon said she believed the approach "balanced the need to invest in and support our public services".
Scottish Lib Dem leader Willie Rennie has accused the SNP of having a "dismal record on actually using the powers they've spent their lives calling for". She added: "By adopting a different path to the UK government we could generate more than £1bn of additional revenues, enabling us to protect the public services we all rely on. We believe that this proposal is reasonable, it is balanced and it is fair."
But the Scottish Conservatives have warned against raising taxes in Scotland to levels that are higher than those elsewhere in the UK. What are the other main Scottish parties saying?
A commission set up by the party suggested that Scotland should instead create a new middle income tax band between the current 20% and 40% bands. Scottish Labour - Leader Kezia Dugdale said: "Nicola Sturgeon had the chance to be bold, but instead what's clear is that the SNP will make no significant changes to income tax. A year ago, the SNP said they would support a 50p tax rate on people earning more than £150,000 a year - the top 1% of earners. Even on this change - which would see the most well off bear more of the burden - the SNP have bottled it." (Against the 40p threshold change.)
Speaking ahead of the SNP announcement, Conservative finance spokesman Murdo Fraser said: "We have been waiting a long time for the SNP to flesh out what they will do with income tax. Scottish Conservatives - Leader Ruth Davidson: "Nicola Sturgeon has confirmed today that she wants to make Scotland the highest taxed part of the UK. In the last five years alone, 140,000 Scots have been dragged into paying the higher rate of income tax, including public sector servants such as nurses, teachers and policemen and women. Nicola Sturgeon could have chosen to support them today but instead she has decided not to. That is bad for the Scottish economy and bad for Scottish jobs." (For the 40p threshold change.)
"Voters have been kept in the dark and the Nationalists need to outline whether or not they think it is fair for Scots to be hit harder in the pocket or not. " Scottish Greens - Co-convenor Patrick Harvie said: "In the independence referendum, and in the Smith Commission, the Scottish Greens argued alongside Nicola Sturgeon and John Swinney that Scotland needed the power to build a fairer, more equal society and an economy that protects our vital public services and invests in our young people's future. To finally win these powers and then not use them is extraordinary." (Against the 40p threshold change.)
In his budget, Mr Swinney set the Scottish Rate of Income Tax at 10p - meaning it will remain exactly the same as the rest of the UK this year. Scottish Lib Dems - Leader Willie Rennie said: "The SNP's proposals are pathetically timid. This plan raises no extra money, not a single pound more, for public services desperately in need of investment. This is a missed opportunity; the SNP are refusing to use the full set of new tax powers coming to us at Holyrood. The Liberal Democrats' penny on income tax for education would make a transformational investment in education. £475m a year for nurseries, schools and colleges." (Against the 40p threshold change.)
But the SNP, which will be seeking a third consecutive term in government when Scotland goes to the polls on 5 May, has so far not set out its detailed proposals for what should happen once the wider powers over income tax are devolved next year. What's happening with Scotland's taxes?
The party has previously said it would seek to introduce a "more progressive" income tax regime. April 2016
And Ms Sturgeon told the recent SNP conference that the basic rate of income tax would not be increased in Scotland if she was returned as first minister. April 2017
People in Scotland's four highest council tax bands will also pay more under plans unveiled by Ms Sturgeon last month, which she said would raise a total of about £100m a year for education.
What is the Scottish rate of income tax?
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